Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-32630 | |
Entity Registrant Name | FIDELITY NATIONAL FINANCIAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 16-1725106 | |
Entity Address, Address Line One | 601 Riverside Avenue | |
Entity Address, City or Town | Jacksonville | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32204 | |
City Area Code | 904 | |
Local Phone Number | 854-8100 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 291,849,069 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001331875 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | FNF Common Stock, $0.0001 par value | |
Trading Symbol | FNF | |
Security Exchange Name | NYSE | |
5.50% Notes Due September 2022 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.50% Notes due September 2022 | |
Trading Symbol | FNF22 | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Investments: | ||
Fixed maturity securities, available-for-sale, at fair value (amortized cost: June 30, 2020 - $24,445; December 31, 2019 - $2,029 and allowance for expected credit losses: June 30, 2020 - $701; December 31, 2019 - $0) | $ 25,114 | $ 2,090 |
Derivative investments | 333 | 0 |
Mortgage loans, net of allowance for credit losses of $28 at June 30, 2020 | 1,749 | 0 |
Investments in unconsolidated affiliates | 1,191 | 131 |
Other long-term investments | 466 | 153 |
Short-term investments | 209 | 876 |
Total investments | 30,968 | 4,384 |
Cash and cash equivalents, at June 30, 2020 and December 31, 2019 includes $327 and $384, respectively, of pledged cash related to secured trust deposits | 2,353 | 1,376 |
Trade and notes receivables, net of allowance of $26 and $20 at June 30, 2020 and December 31, 2019, respectively | 334 | 346 |
Reinsurance recoverable, net of allowance for credit losses of $22 at June 30, 2020 | 3,182 | 0 |
Goodwill | 4,452 | 2,727 |
Prepaid expenses and other assets | 805 | 432 |
Lease assets | 393 | 410 |
Other intangible assets, net | 2,435 | 422 |
Title plants | 404 | 404 |
Property and equipment, net | 173 | 176 |
Assets of discontinued operations | 2,502 | 0 |
Total assets | 48,001 | 10,677 |
Liabilities: | ||
Contractholder funds | 26,628 | 0 |
Future policy benefits | 4,092 | 0 |
Accounts payable and accrued liabilities | 2,135 | 1,094 |
Notes payable | 2,430 | 838 |
Reserve for title claim losses | 1,528 | 1,509 |
Funds withheld for reinsurance liabilities | 817 | 0 |
Secured trust deposits | 735 | 791 |
Lease liabilities | 430 | 442 |
Income taxes payable | 92 | 10 |
Deferred tax liability | 74 | 284 |
Liabilities of discontinued operations | 2,347 | 0 |
Total liabilities | 41,308 | 4,968 |
Commitments and Contingencies | ||
Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC | 344 | 344 |
Equity: | ||
FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of June 30, 2020 and December 31, 2019; outstanding of 291,733,083 and 275,563,436 as of June 30, 2020 and December 31, 2019, respectively, and issued of 318,842,665 and 292,236,476 as of June 30, 2020 and December 31, 2019, respectively | 0 | 0 |
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none | 0 | 0 |
Additional paid-in capital | 5,431 | 4,581 |
Retained earnings | 1,417 | 1,356 |
Accumulated other comprehensive earnings | 429 | 43 |
Less: Treasury stock, 27,109,582 shares and 16,673,040 shares as of June 30, 2020 and December 31, 2019, respectively, at cost | (919) | (598) |
Total Fidelity National Financial, Inc. shareholders’ equity | 6,358 | 5,382 |
Non-controlling interests | (9) | (17) |
Total equity | 6,349 | 5,365 |
Total liabilities, redeemable non-controlling interest and equity | 48,001 | 10,677 |
Preferred securities | ||
Investments: | ||
Securities, at fair value | 1,203 | 323 |
Equity securities | ||
Investments: | ||
Securities, at fair value | $ 703 | $ 811 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Available for sale securities, allowance for credit losses | $ 28,000,000 | $ 0 |
Allowance for credit loss | 28,000,000 | |
Cash, pledged, customer advances and deposits | 327,000,000 | 384,000,000 |
Allowance for doubtful accounts, premiums and other receivables | 26,000,000 | $ 20,000,000 |
Expected credit losses on reinsurance recoverable | $ 22,000,000 | |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, shares, outstanding (in shares) | 291,733,083 | 275,563,436 |
Common stock, shares, issued (in shares) | 318,842,665 | 292,236,476 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 27,109,582 | 16,673,040 |
ServiceLink Holdings, LLC | ||
Redeemable non-controlling interest, ownership percentage | 21.00% | 21.00% |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Direct title insurance premiums | $ 575 | $ 625 | $ 1,121 | $ 1,065 |
Agency title insurance premiums | 784 | 754 | 1,516 | 1,306 |
Escrow, title-related and other fees | 747 | 665 | 1,348 | 1,199 |
Interest and investment income | 152 | 59 | 205 | 113 |
Realized gains and losses, net | 162 | 41 | (158) | 183 |
Total revenues | 2,420 | 2,144 | 4,032 | 3,866 |
Expenses: | ||||
Personnel costs | 692 | 685 | 1,306 | 1,277 |
Agent commissions | 598 | 579 | 1,158 | 1,000 |
Other operating expenses | 446 | 409 | 857 | 753 |
Benefits and other changes in policy reserves | 155 | 0 | 155 | 0 |
Depreciation and amortization | 46 | 44 | 89 | 88 |
Provision for title claim losses | 61 | 62 | 119 | 107 |
Interest expense | 21 | 12 | 33 | 24 |
Total expenses | 2,019 | 1,791 | 3,717 | 3,249 |
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates | 401 | 353 | 315 | 617 |
Income tax expense | 89 | 86 | 61 | 151 |
Earnings (loss) before equity in earnings of unconsolidated affiliates | 312 | 267 | 254 | 466 |
Equity in earnings of unconsolidated affiliates | 1 | 3 | 2 | 10 |
Net earnings from continuing operations | 313 | 270 | 256 | 476 |
Net earnings from discontinued operations, net of tax | 5 | 0 | 5 | 0 |
Net earnings | 318 | 270 | 261 | 476 |
Less: Net earnings attributable to non-controlling interests | 9 | 4 | 13 | 4 |
Net earnings attributable to Fidelity National Financial, Inc. common shareholders | $ 309 | $ 266 | $ 248 | $ 472 |
Earnings per share | ||||
Net earnings from continuing operations attributable to FNF commons shareholders (in usd per share) | $ 1.10 | $ 0.97 | $ 0.88 | $ 1.73 |
Net earnings from discontinued operations attributable to FNF common shareholders (in usd per share) | 0.02 | 0 | 0.02 | 0 |
Net earnings per share attributable to FNF common shareholders (in usd per share) | 1.12 | 0.97 | 0.90 | 1.73 |
Diluted | ||||
Net earnings from continuing operations attributable to FNF commons shareholders (in usd per share) | 1.09 | 0.96 | 0.87 | 1.70 |
Net earnings from discontinued operations attributable to FNF common shareholders (in usd per share) | 0.02 | 0 | 0.02 | 0 |
Net earnings per share attributable to FNF shareholders (in usd per share) | $ 1.11 | $ 0.96 | $ 0.89 | $ 1.70 |
Weighted average shares outstanding, basic basis (in shares) | 277 | 273 | 275 | 273 |
Weighted average shares outstanding, diluted basis (in shares) | 279 | 277 | 278 | 277 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net earnings | $ 318 | $ 270 | $ 261 | $ 476 | |
Other comprehensive earnings: | |||||
Unrealized gain on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) | [1] | 389 | 20 | 380 | 43 |
Unrealized gain on investments in unconsolidated affiliates | [2] | 0 | 1 | 7 | 7 |
Unrealized gain (loss) on foreign currency translation | [3] | 5 | 2 | (4) | 4 |
Reclassification adjustments for change in unrealized gains and losses included in net earnings | [4] | 4 | (1) | 0 | (5) |
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk | [5] | 3 | 0 | 3 | 0 |
Other comprehensive earnings | 401 | 22 | 386 | 49 | |
Comprehensive earnings | 719 | 292 | 647 | 525 | |
Less: Comprehensive earnings attributable to non-controlling interests | 9 | 4 | 13 | 4 | |
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders | $ 710 | $ 288 | $ 634 | $ 521 | |
[1] | Net of income tax expense of $121 million and $6 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $118 million and $14 million for the six-month periods ended June 30, 2020 and 2019, respectively. | ||||
[2] | Net of income tax expense of $0 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $2 million and $2 million for the six-month periods ended June 30, 2020 and 2019, respectively. | ||||
[3] | Net of income tax expense (benefit) of $2 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $(1) million and $1 million for the six-month periods ended June 30, 2020 and 2019, respectively. | ||||
[4] | Net of income tax expense (benefit) of $1 million and $(1) million for the three-month periods ended June 30, 2020 and 2019, respectively, and $0 million and $(2) million for the six-month periods ended June 30, 2020 and 2019, respectively. (5) Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. | ||||
[5] | Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |||
Statement of Comprehensive Income [Abstract] | ||||||
Unrealized (loss) gain on investments and other financial instruments, tax expense | [1] | $ 121 | $ 6 | $ 118 | $ 14 | |
Unrealized gain on investments in unconsolidated affiliates tax expense | [2] | 0 | 1 | 2 | 2 | |
Unrealized (loss) gain foreign currency translation, tax (benefit) expense | [3] | 2 | 1 | (1) | 1 | |
Reclassification adjustments for change in unrealized gains and losses included in net earnings, tax expense (benefit) | [4] | 1 | $ (1) | 0 | $ (2) | |
Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk, tax | $ 1 | [5] | $ 1 | |||
[1] | Net of income tax expense of $121 million and $6 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $118 million and $14 million for the six-month periods ended June 30, 2020 and 2019, respectively. | |||||
[2] | Net of income tax expense of $0 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $2 million and $2 million for the six-month periods ended June 30, 2020 and 2019, respectively. | |||||
[3] | Net of income tax expense (benefit) of $2 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $(1) million and $1 million for the six-month periods ended June 30, 2020 and 2019, respectively. | |||||
[4] | Net of income tax expense (benefit) of $1 million and $(1) million for the three-month periods ended June 30, 2020 and 2019, respectively, and $0 million and $(2) million for the six-month periods ended June 30, 2020 and 2019, respectively. (5) Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. | |||||
[5] | Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCI Attributable to Parent | Treasury Stock | Non-controlling Interest | ||
Beginning balance (in shares) at Dec. 31, 2018 | 290,000 | 14,000 | |||||||
Beginning balance at Dec. 31, 2018 | $ 4,628 | $ 0 | $ 4,500 | $ 641 | $ (13) | $ (498) | $ (2) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 6 | 6 | |||||||
Purchase of additional share in consolidated subsidiaries | (3) | 4 | (7) | ||||||
Treasury stock repurchased (in shares) | (1,000) | ||||||||
Treasury stock repurchased | (46) | $ (46) | |||||||
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk | [1] | 0 | |||||||
Other comprehensive loss — unrealized gain on investments and other financial instruments | 43 | 43 | |||||||
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates | 7 | [2] | 7 | ||||||
Other comprehensive earnings - unrealized gain on foreign currency translation | 4 | [3] | 4 | ||||||
Reclassification adjustments for change in unrealized gains and losses included in net earnings | (5) | [4] | (5) | ||||||
Stock-based compensation | 18 | 18 | |||||||
Dividends declared, per common share | (171) | (171) | |||||||
Subsidiary dividends declared to non-controlling interests | (5) | (5) | |||||||
Net earnings | 476 | 472 | 4 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 290,000 | 15,000 | |||||||
Ending balance at Jun. 30, 2019 | 4,952 | $ 0 | 4,528 | 942 | 36 | $ (544) | (10) | ||
Beginning Balance at Dec. 31, 2018 | 344 | ||||||||
Ending Balance at Jun. 30, 2019 | 344 | ||||||||
Beginning balance (in shares) at Mar. 31, 2019 | 290,000 | 15,000 | |||||||
Beginning balance at Mar. 31, 2019 | 4,765 | $ 0 | 4,510 | 762 | 14 | $ (516) | (5) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 5 | 5 | |||||||
Purchase of additional share in consolidated subsidiaries | (3) | 4 | (7) | ||||||
Treasury stock repurchased | (28) | $ (28) | |||||||
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk | [1] | 0 | |||||||
Other comprehensive loss — unrealized gain on investments and other financial instruments | 20 | 20 | |||||||
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates | 1 | [2] | 1 | ||||||
Other comprehensive earnings - unrealized gain on foreign currency translation | 2 | [3] | 2 | ||||||
Reclassification adjustments for change in unrealized gains and losses included in net earnings | (1) | [4] | (1) | ||||||
Stock-based compensation | 9 | 9 | |||||||
Dividends declared, per common share | (86) | (86) | |||||||
Subsidiary dividends declared to non-controlling interests | (2) | (2) | |||||||
Net earnings | 270 | 266 | 4 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 290,000 | 15,000 | |||||||
Ending balance at Jun. 30, 2019 | 4,952 | $ 0 | 4,528 | 942 | 36 | $ (544) | (10) | ||
Beginning Balance at Mar. 31, 2019 | 344 | ||||||||
Ending Balance at Jun. 30, 2019 | 344 | ||||||||
Beginning balance (in shares) at Dec. 31, 2019 | 292,000 | 17,000 | |||||||
Beginning balance at Dec. 31, 2019 | 5,365 | $ 0 | 4,581 | 1,356 | 43 | $ (598) | (17) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 2,000 | ||||||||
Exercise of stock options | 37 | 37 | |||||||
F&G acquisition (in shares) | 24,000 | 7,000 | |||||||
F&G acquisition | 577 | 794 | $ (217) | ||||||
Treasury stock repurchased (in shares) | (3,000) | ||||||||
Treasury stock repurchased | (104) | $ (104) | |||||||
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk | 3 | [1] | 3 | ||||||
Other comprehensive loss — unrealized gain on investments and other financial instruments | 380 | ||||||||
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates | 7 | [2] | 7 | ||||||
Other comprehensive earnings - unrealized gain on foreign currency translation | (4) | [3] | (4) | ||||||
Reclassification adjustments for change in unrealized gains and losses included in net earnings | [4] | 0 | |||||||
Stock-based compensation | 19 | 19 | 0 | ||||||
Dividends declared, per common share | (187) | (187) | |||||||
Subsidiary dividends declared to non-controlling interests | (5) | (5) | |||||||
Net earnings | 261 | 248 | 13 | ||||||
Ending balance (in shares) at Jun. 30, 2020 | 318,000 | 27,000 | |||||||
Ending balance at Jun. 30, 2020 | 6,349 | $ 0 | 5,431 | 1,417 | 429 | $ (919) | (9) | ||
Beginning Balance at Dec. 31, 2019 | 344 | ||||||||
Ending Balance at Jun. 30, 2020 | 344 | ||||||||
Beginning balance (in shares) at Mar. 31, 2020 | 292,000 | 20,000 | |||||||
Beginning balance at Mar. 31, 2020 | 5,116 | $ 0 | 4,592 | 1,204 | 28 | $ (692) | (16) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 2,000 | ||||||||
Exercise of stock options | 35 | 35 | |||||||
F&G acquisition (in shares) | 24,000 | 7,000 | |||||||
F&G acquisition | 577 | 794 | $ (217) | ||||||
Treasury stock repurchased | (10) | $ (10) | |||||||
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk | 3 | [1] | 3 | ||||||
Other comprehensive loss — unrealized gain on investments and other financial instruments | 389 | 389 | |||||||
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates | [2] | 0 | |||||||
Other comprehensive earnings - unrealized gain on foreign currency translation | 5 | [3] | 5 | ||||||
Reclassification adjustments for change in unrealized gains and losses included in net earnings | 4 | [4] | 4 | ||||||
Stock-based compensation | 10 | 10 | |||||||
Dividends declared, per common share | (96) | (96) | |||||||
Subsidiary dividends declared to non-controlling interests | (2) | (2) | |||||||
Net earnings | 318 | 309 | 9 | ||||||
Ending balance (in shares) at Jun. 30, 2020 | 318,000 | 27,000 | |||||||
Ending balance at Jun. 30, 2020 | 6,349 | $ 0 | $ 5,431 | $ 1,417 | $ 429 | $ (919) | $ (9) | ||
Beginning Balance at Mar. 31, 2020 | 344 | ||||||||
Ending Balance at Jun. 30, 2020 | $ 344 | ||||||||
[1] | Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. | ||||||||
[2] | Net of income tax expense of $0 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $2 million and $2 million for the six-month periods ended June 30, 2020 and 2019, respectively. | ||||||||
[3] | Net of income tax expense (benefit) of $2 million and $1 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $(1) million and $1 million for the six-month periods ended June 30, 2020 and 2019, respectively. | ||||||||
[4] | Net of income tax expense (benefit) of $1 million and $(1) million for the three-month periods ended June 30, 2020 and 2019, respectively, and $0 million and $(2) million for the six-month periods ended June 30, 2020 and 2019, respectively. (5) Net of income tax expense of $1 million for the three and six-month periods ended June 30, 2020. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividend per common share (in dollars per share) | $ 0.33 | $ 0.31 | $ 0.66 | $ 0.62 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 261 | $ 476 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 89 | 88 |
Equity in earnings of unconsolidated affiliates | (2) | (10) |
Loss on sales of investments and other assets and asset impairments, net | 58 | 4 |
Interest credited/index credits to contractholder account balances | 123 | 0 |
Increase (Decrease) in Deferred Policy Acquisition Costs and Deferred Sales Inducements | (30) | 0 |
Charges Assessed To Contract Holders For Mortality And Administration | (13) | 0 |
Non-cash lease costs | 77 | 73 |
Operating lease payments | (77) | (75) |
Distributions from unconsolidated affiliates, return on investment | 0 | 5 |
Stock-based compensation cost | 19 | 18 |
Change in valuation of equity and preferred securities, net | 100 | (187) |
Increase (Decrease) in Collateral Returned (posted) | 7 | 0 |
Change in reinsurance recoverable | 55 | 0 |
Future policy benefits reflected in net income (loss) | (10) | 0 |
Increase (Decrease) in Reinsurance Payables | 1 | 0 |
Changes in assets and liabilities, net of effects from acquisitions: | ||
Net decrease (increase) in trade receivables | 9 | (51) |
Net (increase) in prepaid expenses and other assets | (131) | (48) |
Net (decrease) increase in accounts payable, accrued liabilities, deferred revenue and other | (51) | 16 |
Net increase (decrease) in reserve for title claim losses | 20 | (8) |
Net change in income taxes | 48 | 71 |
Net cash provided by (used in) operating activities | 553 | 372 |
Cash flows from investing activities: | ||
Proceeds from sales of investment securities | 360 | 405 |
Proceeds from calls and maturities of investment securities | 311 | 112 |
Proceeds from sales of property and equipment | 9 | 0 |
Fundings of Cannae Holdings Inc. note receivable | 0 | (100) |
Proceeds from repayments of Cannae Holdings Inc. note receivable | 0 | 100 |
Additions to property and equipment and capitalized software | (48) | (47) |
Purchases of investment securities | (686) | (518) |
Net proceeds from sales and maturities of short-term investment securities | 704 | 166 |
Payments to Acquire Notes Receivable | (2) | 0 |
Proceeds from Collection of Notes Receivable | 5 | 0 |
Payments to Acquire Businesses, Net of Cash Acquired | (976) | 0 |
Additional investments in unconsolidated affiliates | (55) | (20) |
Distributions from unconsolidated affiliates, return of investment | 25 | 27 |
Net other investing activities | 0 | (5) |
Net cash provided by (used in) investing activities | (353) | 120 |
Cash flows from financing activities: | ||
Draw on revolving credit facility | 1,000 | 0 |
Debt offering | 648 | 0 |
Debt costs/equity issuance additions | (12) | 0 |
Repayment of principal borrowed | (640) | 0 |
Dividends paid | (186) | (169) |
Subsidiary dividends paid to non-controlling interest shareholders | (5) | (5) |
Exercise of stock options | 37 | 6 |
Net change in secured trust deposits | (57) | 90 |
Payments to Noncontrolling Interests | 0 | (3) |
Payment of contingent consideration for prior period acquisitions | (8) | (17) |
Contractholder account deposits | 297 | 0 |
Contractholder account withdrawals | (193) | 0 |
Purchases of treasury stock | (104) | (46) |
Net cash provided by (used in) financing activities | 777 | (144) |
Net increase in cash and cash equivalents | 977 | 348 |
Cash and cash equivalents at beginning of period | 1,376 | 1,257 |
Cash and cash equivalents at end of period | $ 2,353 | $ 1,605 |
Basis of Financial Statements
Basis of Financial Statements | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Financial Statements | Basis of Financial Statements The financial information in this report presented for interim periods is unaudited and includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” the "Company" or “FNF”) prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, 2019. Description of the Business We are a leading provider of (i) title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products, (ii) technology and transaction services to the real estate and mortgage industries and (iii) annuity and life insurance products. FNF is one of the nation’s largest title insurance companies operating through its title insurance underwriters - Fidelity National Title Insurance Company ("FNTIC"), Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company ("Commonwealth Title"), Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary, ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans. We are also a provider of annuity and life insurance products, providing deferred annuities, including fixed index annuities ("FIA"), fixed rate annuities, and immediate annuities and indexed universal life ("IUL") insurance through our wholly-owned subsidiary, FGL Holdings ("F&G"). For information about our reportable segments refe r to Note K Seg ment Information . Recent Developments Acquisition of F&G On June 1, 2020, we completed our previously announced acquisition of F&G for approximately $2.7 billion pursuant to the Agreement and Plan of Merger, dated February 7, 2020, as amended (the "Merger Agreement"). For additional information on our acquisition of F&G refer to Note B Acquisitions . Term Loan In connection with the acquisition of F&G, on April 22, 2020, we entered into a term loan credit agreement that provides for an aggregate principal borrowing of $1.0 billion (the "Term Loan Agreement") with Bank of America, N.A, as administrative agent (in such capacity, the "Administrative Agent"), JPMorgan Chase Bank, N.A., as syndication agent, and the other lenders party thereto from time to time (the “Term Lenders”), pursuant to which the Term Lenders provided a $1.0 billion delayed draw term loan facility (the “Term Loan”). On June 1, 2020, we drew down the full $1.0 billion in aggregate borrowing under the Term Loan to fund a portion of the acquisition of F&G. 3.40% Senior Notes On June 12, 2020, we completed our underwritten public offering of $650 million aggregate principal amount of our 3.40% Notes due June 15, 2030 (the “3.40% Notes”). The net proceeds from the registered offering of the 3.40% Notes were approximately $642 million, after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the offering to repay $640 million of the outstanding principal amount under the Term Loan Agreement. For further information related to the Term Loan and the 3.40% Notes refer to Note G Notes Payable. Purchase of redeemable non-controlling interest of ServiceLink On July 29, 2020, we purchased for $90 million the outstanding Class A units of ServiceLink held by minority owners. As of the purchase date ServiceLink is a wholly owned subsidiary of FNF. Income Tax Income tax expense was $89 million and $86 million in the three-month periods ended June 30, 2020 and 2019, respectively and $61 million and $151 million in the six-month periods ended June 30, 2020 and 2019, respectively. Income tax expense as a percentage of earnings before income taxes was 22% and 24% in the three-month periods ended June 30, 2020 and 2019, respectively and 19% and 24% in the six-month periods ended June 30, 2020 and 2019, respectively. The decline in income tax expense as a percentage of earnings before taxes in the 2020 periods from the comparable periods in 2019 is primarily attributable to the inclusion of our F&G business, which incurs minimal state taxes, and stock compensation related tax benefits recognized, partially offset by non-deductible acquisition costs. Earnings Per Share Basic earnings per share, as presented on the Condensed Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders in a given period by the weighted average number of common shares outstanding during such period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock, convertible debt instruments and certain other convertible share based payments which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported. Options or other instruments which provide the ability to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. There were 1 million antidilutive securities outstanding during the three and six-month periods ended June 30, 2020, respectively. There were no antidilutive instruments outstanding during the three or six-month periods ended June 30, 2019. Recent Accounting Pronouncements Adopted Pronouncements In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of fixed maturity securities available for sale. The method used to measure estimated credit losses for fixed maturity available-for-sale securities will be unchanged from current GAAP; however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those securities. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting period beginning after December 15, 2019 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable Generally Accepted Accounting Principles. We adopted this standard using the prospective transition approach for debt securities for which other than temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of ASC 326. The effective interest rate on these debt securities was not changed. Amounts previously recognized in accumulated other comprehensive income as of January 1, 2020 relating to improvements in cash flows expected to be collected will be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received. See Note E Investments for further discussion of the adoption as it relates to our fixed maturity securities available for sale. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We have adopted this standard as of January 1, 2020 and are applying this guidance on a prospective basis. The overall effect of Topic 350 had no impact to the Condensed Consolidated Financial Statements upon adoption. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. The new guidance introduces the following requirements: for investments in certain entities that calculate net asset value, investors are required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption might lapse if the investee has communicated timing to the entity or announced timing publicly; entities should use the measurement uncertainty disclosure to communicate information about the uncertainty in measurement as of the reporting date; entities must disclose changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, or other quantitative information in lieu of weighted average if the entity determines such information would be more reasonable and rational; and entities are no longer required to disclose the amounts and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and the overall effect of Topic 820 on our unaudited Condensed Consolidated Financial Statements was not material upon adoption. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Under this update, entities must consider indirect interests held through related parties under common control on a proportional basis to determine whether a decision-making fee is a variable interest. We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and it did not have an impact on our unaudited Condensed Consolidated Financial Statements. Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We do not expect this guidance to have a material impact on our Consolidated Financial Statements and related disclosures upon adoption. In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts, effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. In June of 2020, the FASB voted to propose a one-year deferral of the effective date of ASU 2018-12 in response to implementation challenges resulting from COVID-19. This update introduced the following requirements: assumptions used to measure cash flows for traditional and limited-payment contracts must be reviewed at least annually with the effect of changes in those assumptions being recognized in the statement of operations; the discount rate applied to measure the liability for future policy benefits and limited-payment contracts must be updated at each reporting date with the effect of changes in the rate being recognized in other comprehensive income; market risk benefits associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value attributable to a change in the instrument-specific credit risk being recognized in other comprehensive income; deferred acquisition costs are required to be amortized in proportion to premiums, gross profits, or gross margins and those balances must be amortized on a constant level basis over the expected term of the related contracts; deferred acquisition costs must be written off for unexpected contract terminations; an disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions, and methods used in measurement are required to be disclosed. The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements. We do not currently expect to early adopt this standard. We have identified specific areas that will be impacted by the new guidance and are in the process of assessing the accounting, reporting and/or process changes that will be required to comply as well as the impact of the new guidance on our consolidated financial statements. Summary of additional significant accounting policies Since our Annual Report on Form 10-K for the year ended December 31, 2019, as a result of our acquisition of F&G we have added the following significant accounting policies, which have been followed in preparing the accompanying Condensed Consolidated Financial Statements: Principles of Consolidation - VIEs We are involved in certain entities that are considered variable interest entities ("VIEs") as defined under U.S. GAAP. Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes. A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support or where investors lack certain characteristics of a controlling financial interest. We assess our relationships to determine if we have the ability to direct the activities, or otherwise exert control, to evaluate if we are the primary beneficiary of the VIE. If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in our unaudited consolidated financial statements. See Note E Investments for additional information on our investments in VIEs. Revenue Recognition - Life Insurance and Annuity Premiums Our insurance premiums for traditional life insurance products are recognized as revenue when due from the contractholder, net of premiums ceded under reinsurance, and are included within Escrow, title-related, and other fees in the Condensed Consolidated Statements of Earnings. Our traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of term life insurance and certain annuities with life contingencies. Premium collections for FIA and fixed rate annuities, IUL policies and immediate annuities without life contingency are reported as an increase to deposit liabilities (i.e., contractholder funds) instead of as revenues. Similarly, cash payments to policyholders are reported as decreases in the liability for contractholder funds and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender and other charges deducted from contractholder funds, and net realized gains (losses) on investments. Surrender charges are earned when a policyholder withdraws funds from the contract early or cancels the contract. Revenue Recognition - Interest and investment income Dividends and interest income are recorded in Interest and investment income and recognized when earned. Income or losses upon call or prepayment of available-for-sale fixed maturity securities are recognized in Interest and investment income. Amortization of premiums and accretion of discounts on investments in fixed maturity securities are reflected in Interest and investment income over the contractual terms of the investments, and for callable investments at a premium, based on the earliest call date of the investments, in a manner that produces a constant effective yield. For mortgage-backed and asset-backed securities, included in the fixed maturity available-for-sale (“AFS”) securities portfolios, we recognize income using a constant effective yield based on anticipated cash flows and the estimated economic life of the securities. When actual prepayments differ significantly from originally anticipated prepayments, the effective yield is generally recalculated prospectively to reflect actual payments to date plus anticipated future payments. Any adjustments resulting from changes in effective yield are reflected in Interest and investment income. For details on interest and investment income recognition on investments in unconsolidated affiliates and mortgage loans, refer to the respective subsections below. Interest and investment income is presented net of earned investment management fees. Insurance and Investment Product Fees and Other Product fee revenue from indexed universal life ("IUL") products and annuities is comprised of policy and contract fees charged for the cost of insurance, policy administration and rider fees. Fees are assessed on a monthly basis and recognized as revenue when earned. Product fee revenue also includes surrender charges which are collected and recognized as revenue when the policy is surrendered. Some of the product fee revenue is not level by policy year. The unearned portion of the revenues are deferred and brought into income relative to the gross profits of the business. Insurance and investment product fees and other are included within Escrow, title-related, and other fees in the Condensed Consolidated Statements of Earnings, and unearned revenue liability is included within Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. Benefits and Other Changes in Policy Reserves Benefit expenses for FIA, fixed rate annuities and IUL policies include index credits and interest credited to contractholder account balances and benefit claims in excess of contract account balances, net of reinsurance recoveries, are charged to expense in the period that they are earned by the policyholder based on their selected strategy. Interest crediting rates associated with funds invested in the general account of our insurance subsidiaries range from 0.5% to 6.0% for deferred annuities and FIAs combined, and 3.0% to 4.8% for IULs. Other changes in policy reserves include the change in the fair value of the FIA embedded derivative and the change in the reserve for secondary guarantee benefit payments. Other changes in policy reserves also include the change in reserves for life insurance products. For traditional life and immediate annuities, policy benefit claims are charged to expense in the period that the claims are incurred, net of reinsurance recoveries. Investment Securities Our investments in fixed maturity securities have been designated as AFS and are carried at fair value with unrealized gains and losses included in Accumulated other comprehensive income (“AOCI”), net of associated intangible asset and unearned revenue ("UREV") “shadow adjustments” (discussed in Note M Intangibles ), SOP 03-1 reserves and deferred income taxes. Our investments in equity securities and preferred securities are carried at fair value with unrealized gains and losses included in Realized gains and losses, net. Mortgage Loans Our investment in mortgage loans consists of commercial and residential mortgage loans on real estate, which are reported at amortized cost, less allowance for losses. For details on our policy around allowance for expected credit loss on mortgage loans, refer to Note E Investments . Commercial mortgage loans are continuously monitored by reviewing appraisals, operating statements, rent revenues, annual inspection reports, loan specific credit quality, property characteristics, market trends and other factors. Commercial mortgage loans are rated for the purpose of quantifying the level of risk. Loans are placed on a watch list when the debt service coverage ("DSC") ratio falls below and the loan-to-value ("LTV") ratios exceeds certain thresholds. Loans on the watchlist are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or interest. We define delinquent mortgage loans as 30 days past due, consistent with industry practice. Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define nonperforming residential mortgage loans as those that are 90 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss. Interest on loans is recognized on an accrual basis at the applicable interest rate on the principal amount outstanding. Loan origination fees and direct costs, as well as premiums and discounts, are amortized as level yield adjustments over the respective loan terms. Unamortized net fees or costs are recognized upon early repayment of the loans. Loan commitment fees are deferred and amortized on an effective yield basis over the term of the loan. Derivative Financial Instruments We hedge certain portions of our exposure to product related equity market risk by entering into derivative transactions (primarily call options). All such derivative instruments are recognized as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value. The changes in fair value are reported within Realized gains and losses, net in the accompanying Condensed Consolidated Statements of Earnings. We purchase financial instruments and issue products that may contain embedded derivative instruments. If it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract for measurement purposes. The embedded derivative is carried at fair value, which is determined through a combination of market observable inputs such as market value of option and interest swap rates and unobservable inputs such as the mortality multiplier, surrender and withdrawal rates and non-performance spread. The changes in fair value are reported within Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Earnings. See a description of the fair value methodology used in Note D Fair Value of Financial Instruments . Investments in Unconsolidated Affiliates We account for our investments in unconsolidated affiliates using the equity method and use net asset value ("NAV") as a practical expedient to determine the carrying value. Income from investments in unconsolidated affiliates is included within Interest and investment income in the accompanying Condensed Consolidated Statements of Earnings. Recognition of income is delayed due to the availability of the related financial statements, which are obtained from the affiliate’s general partner generally on a one to three-month delay. Management meets quarterly with the general partner to determine whether any credit or other market events have occurred since prior quarter financial statements to ensure any material events are properly included in current quarter valuation and investment income. In addition, the impact of audit adjustments related to completion of calendar-year financial statement audits of the unconsolidated affiliates are typically received during the second quarter of each calendar year. Accordingly, our investment income from our investments in unconsolidated affiliates for any calendar-year period may not include the complete impact of the change in the underlying net assets for the unconsolidated affiliate for that calendar-year period. Intangible Assets Our intangible assets include an intangible asset reflecting the value of insurance and reinsurance contracts acquired (hereafter referred to as the value of business acquired (“VOBA”), the value of distribution network acquired ("VODA"), deferred acquisition costs (“DAC”), deferred sales inducements (“DSI”), internally developed software, trademarks and state licenses. VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts in a life insurance company acquisition. It represents the portion of the purchase price allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date. VODA is an intangible asset that represents the value of an existing distribution network. DAC consists principally of commissions that are related directly to the successful sale of new or renewal insurance contracts, which may be deferred to the extent recoverable. Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred. DSI represents up front bonus credits and vesting bonuses to policyholder account values which may be deferred to the extent recoverable. The methodology for determining the amortization of DAC, DSI and VOBA varies by product type. For all insurance contracts accounted for under long-duration contract deposit accounting, amortization is based on assumptions consistent with those used in the development of the underlying contract liabilities adjusted for emerging experience and expected trends. Internally developed software and trade name intangible assets are amortized on a straight-line basis over their deemed useful lives while VODA is amortized using the sum of years digits method. For all of the insurance intangibles (DAC, DSI and VOBA), the balances are generally amortized over the lives of the policies in relation to the expected emergence of estimated gross profits (“EGPs”) from investment income, surrender charges and other product fees, less policy benefits, maintenance expenses, mortality net of reinsurance ceded, and expense margins. Recognized gains (losses) on investments and changes in fair value of the funds withheld coinsurance embedded derivative are included in actual gross profits in the period realized as described further below. Amortization is reported within Depreciation and amortization in the accompanying Condensed Consolidated Statements of Earnings. Changes in assumptions, including our earned rate (i.e., long term assumptions of the Company’s expected earnings on related investments), budgeted option costs (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature) and surrender rates can have a significant impact on VOBA, DAC and DSI balances and amortization rates. Due to the relative size and sensitivity to minor changes in underlying assumptions of those intangible balances, we perform quarterly and annual analysis of the VOBA, DAC and DSI balances for recoverability to ensure that the unamortized portion does not exceed the expected recoverable amounts. At each evaluation date, actual historical gross profits are reflected with the impact on the intangibles reported as “unlocking” as a component of amortization expense, and estimated future gross profits and related assumptions are evaluated for continued reasonableness. Any adjustment in estimated future gross profits requires that the amortization rate be revised (“unlocking”) retroactively to the date of the policy or contract issuance. The cumulative unlocking adjustment is recognized as a component of current period amortization. Amortization expense of VOBA, DAC and DSI reflects an assumption for an expected level of credit-related investment losses. When actual credit-related investment losses are realized, we perform a retrospective unlocking of amortization for those intangibles as actual margins vary from expected margins. This unlocking is reflected in the accompanying Condensed Consolidated Statements of Earnings. For investment-type products, the VOBA, DAC and DSI assets are adjusted for the impact of unrealized gains (losses) on AFS investments as if these gains (losses) had been realized, with corresponding credits or charges included in AOCI ("shadow adjustments"). Reinsurance Our insurance subsidiaries enter into reinsurance agreements with other companies in the normal course of business. Reinsurance agreements are reported on a gross basis in our Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other liabilities for amounts, such as premiums, owed to the reinsurers. Premiums and benefits are reported net of insurance ceded. The effects of certain reinsurance agreements are not accounted for as reinsurance as they do not satisfy the risk transfer requirements for GAAP. The assets and liabilities of certain reinsurance contracts are presented on a net basis in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations, respectively, when there is a right of offset explicit in the reinsurance agreement and deposit accounting is being applied. See Note P Reinsurance for details. Contractholder Funds The liabilities for contractholder funds for deferred annuities and IUL policies consist of contract account balances that accrue to the benefit of the contractholders. The liabilities for FIA policies consist of the value of the host contract plus the fair value of the embedded derivative. The embedded derivative is carried at fair value in Contractholder funds in the accompanying Condensed Consolidated Balance Sheets with changes in fair value reported in Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Earnings, and changes in fair value resulting from unrealized gain/loss reported within Accumulated other comprehensive earnings in the accompanying Condensed Consolidated Balance Sheets. See a description of the fair value methodology used in Note D Fair Value of Financial Instruments . Liabilities for immediate annuities with life contingencies are recorded at the present value of future benefits. Liabilities for the secondary guarantees on UL-type products or Investment-type contracts are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest. The benefit ratio is the ratio of the present value of future secondary guarantees to the present value of the assessments used to provide the secondary guarantees using the same assumptions as we use for our intangible assets. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes in a manner similar to the unlocking of DAC, DSI and VOBA. The accounting for secondary guarantee benefits impact EGPs used to calculate amortization of DAC, DSI and VOBA. The SOP 03-1 reserve is adjusted for th |
Risks and Uncertainties
Risks and Uncertainties | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | Risks and Uncertainties This risks and uncertainties noted below were assumed in connection with our acquisition of F&G. Best Interest Regulation In March 2018, the United States Fifth Circuit Court of Appeals formally vacated the U. S. Department Labor “Fiduciary Rule” which would have imposed fiduciary duties upon insurance agents selling Individual Retirement Account (IRA) annuities and would have potentially had a material impact on the Company, its products, distribution, and business model. Since then, in June 2019, the U.S. Securities and Exchange Commission (SEC) adopted Regulation Best Interest imposing new sales practice standards on securities brokers, which does not directly impact the Company or its distributors, but gives impetus for the National Association of Insurance Commissioners (NAIC) and individual states to consider best interest proposals for insurance sales. The NAIC adopted an amended Suitability in Annuity Transactions Model Regulation in February 2020 incorporating a requirement that agents act in the best interest of consumers without putting their own financial interests or insurer’s interests ahead of consumer interests. It is expected individual states may soon begin to consider and adopt the NAIC model regulation. FGL NY Insurance already modified certain new business processes in response to the New York Department of Financial Services (NYDFS) best interest rule despite relatively low sales in New York. Management is following a legal challenge to nullify the NYDFS rule and will continue to monitor action by other state or federal agencies to implement sales practice rules affecting insurance agents selling fixed insurance or annuity products. Use of Estimates and Assumptions The preparation of the Company's unaudited condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used. Concentrations of Financial Instruments As of June 30, 2020 and December 31, 2019, the Company’s most significant investment in one industry, excluding United States ("U.S.") Government securities, was its investment securities in the Banking industry with a fair value of $2,351 or 9% and $2,414 or 9%, respectively, of the invested assets portfolio and an amortized cost of $2,307 and $2,325, respectively. As of June 30, 2020, the Company’s holdings in this industry include investments in 101 different issuers with the top ten investments accounting for 39% of the total holdings in this industry. As of June 30, 2020 the Company had no investments in issuers that exceeded 10% of shareholders' equity. As of December 31, 2019, the Company had 0 investments in issuers that exceeded 10% of shareholders' equity, with a total fair value of $0 or 0% of the invested assets portfolio: JP Morgan Chase & Co, Metropolitan Transportation Authority (NY), AT&T Inc, HSBC Holdings, Wells Fargo & Company, General Motors Co, Nationwide Mutual Insurance Company, Goldman Sachs Group Inc, United Mexican States, Energy Transfer Partners, Prudential Financial Inc, Citigroup Inc, HP Enterprise Co, Viacom Inc, Kinder Morgan Energy Partners, and Fuel Trust. The Company's largest concentration in any single issuer as of June 30, 2020 and December 31, 2019 was HP Enterprise Co. with a total fair value of $132 or 1%, and HSBC Holdings, with a total fair value of $132 or 1% of the invested assets portfolio, respectively. Concentrations of Financial and Capital Markets Risk The Company is exposed to financial and capital markets risk, including changes in interest rates and credit spreads which can have an adverse effect on the Company’s results of operations, financial condition and liquidity. The Company’s exposure to such financial and capital markets risk relates primarily to the market price and cash flow variability associated with changes in interest rates. A rise in interest rates, in the absence of other countervailing changes, will increase the net unrealized loss position of the Company’s investment portfolio and, if long-term interest rates rise dramatically within a six to twelve month time period, certain of the Company’s products may be exposed to disintermediation risk. Disintermediation risk refers to the risk that policyholders surrender their contracts in a rising interest rate environment, requiring the Company to liquidate assets in an unrealized loss position. The Company attempts to mitigate the risk, including changes in interest rates by investing in less rate-sensitive investments, including senior tranches of collateralized loan obligations, non-agency residential mortgage-backed securities, and various types of asset backed securities. Management believes this risk is also mitigated to some extent by surrender charge protection provided by the Company’s products. The Company expects to continue to face these challenges and uncertainties that could adversely affect its results of operations and financial condition. The Company is closely monitoring developments related to the COVID-19 pandemic to assess its impact on our business. While still evolving, the COVID-19 pandemic has caused significant economic and financial turmoil in the U.S. and around the world, and has fueled concerns that it will lead to a global recession. These conditions may continue or worsen in the near term. At this time, it is not possible to estimate how long it will take to halt the spread of the virus or the longer term-effects the COVID-19 pandemic could have on our business. Increased economic uncertainty and increased unemployment resulting from the economic impacts of the spread of COVID-19 may result in policyholders seeking sources of liquidity and withdrawing at rates greater than we previously expected. If policyholder lapse and surrender rates significantly exceed our expectations, it could have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows. Such events or conditions could also have an adverse effect on our sales of new policies. The Company is monitoring the impact of COVID-19 on the Company’s investment portfolio and the potential for ratings changes caused by the sudden slowdown of economic activity. The extent to which the COVID-19 pandemic impacts our business, results of operations, financial condition, liquidity or prospects will depend on future developments which are highly uncertain and cannot be predicted. Concentration of Reinsurance Risk The Company has a significant concentration of reinsurance risk with third party reinsurers, Wilton Reassurance Company (“Wilton Re”) and Kubera Insurance (SAC) Ltd. ("Kubera"), that could have a material impact on the Company’s financial position in the event that either Wilton Re or Kubera fail to perform their obligations under the various reinsurance treaties. Wilton Re is a wholly-owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"). CPPIB has an AAA issuer credit rating from Standard & Poor's Ratings Services ("S&P") as of June 30, 2020. Kubera is not rated, however, management has attempted to mitigate the risk of non-performance through the funds withheld arrangement. As of June 30, 2020, the net amount recoverable from Wilton Re was $1,478 and the net amount recoverable from Kubera was $828. The Company monitors both the financial condition of individual reinsurers and risk concentration arising from similar activities and economic characteristics of reinsurers to attempt to reduce the risk of default by such reinsurers. The Company believes that all amounts due from Wilton Re and Kubera for periodic treaty settlements are collectible as of June 30, 2020. On March 6, 2019, Scottish Re (U.S.), Inc. (“SRUS”), a Delaware domestic life and health reinsurer of FGL Insurance, was ordered into receivership for purposes of rehabilitation. As of June 30, 2020, the net amount recoverable from SRUS was $47. The financial exposure related to these ceded reserves are substantially mitigated via a reinsurance agreement whereby Wilton Re assumes treaty non-performance including credit risk for this business. On July 9, 2019, Pavonia Life Insurance Company of Michigan ("Pavonia"), a Michigan domiciled life, accident, and health insurance company, was placed into rehabilitation. While the court order indicated that Pavonia had a stable financial condition and lack of non-insurance affiliated investments, the Director of the Michigan Department of Insurance and Financial Services ("MDIFS") has concerns relating to Pavonia's parent company. To insulate Pavonia from its parent until a pending acquisition transaction could be consummated, MDIFS placed Pavonia under supervision and rehabilitation. As of June 30, 2020, the net amount recoverable from Pavonia was $85. The financial exposure related to these ceded reserves are substantially mitigated via a reinsurance agreement whereby Wilton Re assumes treaty non-performance including credit risk for this business. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions F&G On June 1, 2020, we acquired 100% of the outstanding equity of F&G for approximately $2.7 billion. In connection with the Merger, we issued approximately 24 million shares of FNF common stock and paid approximately $1.8 billion in cash to former holders of F&G ordinary and preferred shares. Additionally, we accrued $132 million as a liability to the Kingstown Dissenters, who are former owners of F&G common stock. For more information related to the Dissenting Shareholders, refer to Note H Commitments and Contingencies . At closing, all outstanding shares of F&G common stock, excluding shares associated with the liability to former owners, were converted into the right to receive the Merger Consideration (as defined in the Merger Agreement). Additionally, each outstanding F&G Option and F&G Phantom unit was cancelled and converted into options to purchase FNF common stock and phantom units denominated in FNF common stock, and each outstanding warrant to purchase F&G common stock was converted into the right to purchase and receive upon exercise $8.18 in cash and .0833 shares of FNF common stock. At closing, our subsidiaries' ownership of F&G common and preferred shares was converted into approximately 7 million shares of FNF common stock, which are reflected as treasury shares in the Condensed Consolidated Financial Statements as of June 30, 2020. The initial purchase price is as follows (in millions): Cash paid for outstanding F&G shares $ 1,803 Less: Cash Acquired 827 Net cash paid for F&G 976 Value of FNF share consideration 772 Value of outstanding converted equity awards attributed to services already rendered 28 Liability accrued to former owners of F&G common shares 132 Total net consideration paid $ 1,908 The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").The purchase price has been allocated to F&G's assets acquired and liabilities assumed based on our best estimates of their fair values as of the acquisition date. Due to the close proximity in timing of the F&G acquisition and our filing of this Quarterly Report on Form 10-Q, the fair value of assets acquired and liabilities assumed represent a preliminary allocation as our evaluation of facts and circumstances available as of June 1, 2020 is ongoing. Goodwill has been recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired. Goodwill consists primarily of intangible assets that do not qualify for separate recognition. The goodwill recorded is not expected to be deductible for tax purposes, except for $16 million related to a prior F&G transaction. Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional adjustments as we obtain information not available as of the completion of this preliminary fair value calculation as determined within the measurement period. We will also be required to record, in the same period as the financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. The following table summarizes the preliminary fair value amounts recognized for the assets acquired and liabilities assumed as of the acquisition date (dollars in millions): Fair Value Fixed maturity securities $ 22,389 Preferred securities 876 Equity securities 52 Derivative instruments 313 Mortgage loans 1,754 Investments in unconsolidated affiliates 1,019 Other long-term investments 430 Short-term investments 37 Trade and notes receivable 1 Reinsurance recoverable 3,241 Goodwill 1,725 Prepaid expenses and other assets 352 Lease assets 8 Other intangible assets 2,139 Assets of discontinued operations 2,392 Total assets acquired 36,728 Contractholder funds 26,454 Future policy benefits 4,106 Accounts payable and accrued liabilities 858 Notes payable 589 Funds withheld for reinsurance liabilities 816 Lease liabilities 9 Income taxes payable (26) Deferred tax liability (254) Liabilities of discontinued operations 2,268 Total liabilities assumed 34,820 Net assets acquired $ 1,908 The gross carrying value and weighted average estimated useful lives of Other intangible assets acquired in the F&G acquisition consist of the following (dollars in millions): Gross Carrying Value Weighted Average Other intangible assets: Value of business acquired $ 1,890 Various Value of distribution network acquired 185 15 Trademarks and licenses 43 10 Software 21 2 Total Other intangible assets 2,139 Pro-forma Financial Results F&G's revenues and net loss of $124 million and $39 million, respectively, are included in the Condensed Consolidated Statements of Earnings for the period from June 1, 2020 through June 30, 2020. For comparative purposes, selected unaudited pro-forma consolidated results of operations of FNF for the three and six-month periods ending June 30, 2020 and 2019 are presented below. Pro-forma results presented assume the consolidation of F&G occurred as of the beginning of the respective 2019 periods. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Total revenues $ 2,770 $ 2,596 $ 4,151 $ 4,848 Net earnings attributable to FNF common shareholders 306 271 54 581 Amounts reflect certain pro forma adjustments to revenue and net earnings that were directly attributable to the acquisition, and for the elimination of historical activity between FNF and F&G prior to the acquisition. These adjustments include the following: • elimination of valuation changes on FNF's investment in F&G common and preferred shares prior to the acquisition; • elimination of dividends received by FNF related to its holdings of F&G's common and preferred shares prior to the acquisition • elimination of advisory fees F&G paid to FNF • elimination of transaction costs paid by F&G • adjustment to record interest expense related to financing associated with the acquisition • adjustment to reflect the elimination of historical amortization of F&G intangibles and the additional amortization of F&G intangibles measured at fair value as of the acquisition date • adjustment to reflect the prospective reclassification from accumulated other comprehensive earnings of the unrealized gains on available-for-sale securities to a premium which will be amortized into income based on the expected life of the investment securities |
Summary of Reserve for Title Cl
Summary of Reserve for Title Claim Losses | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Summary of Reserve for Title Claim Losses | Summary of Reserve for Title Claim Losses A summary of the reserve for title claim losses follows: Six months ended June 30, 2020 2019 (Dollars in millions) Beginning balance $ 1,509 $ 1,488 Change in reinsurance recoverable (1) — Claim loss provision related to: Current year 119 107 Prior years — — Total title claim loss provision 119 107 Claims paid, net of recoupments related to: Current year (2) (2) Prior years (97) (113) Total title claims paid, net of recoupments (99) (115) Ending balance of claim loss reserve for title insurance $ 1,528 $ 1,480 Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 4.5 % Several lawsuits have been filed by various parties against Chicago Title Company and Chicago Title Insurance Company as its alter ego (collectively, the “Named Companies”), among others. Generally, plaintiffs claim they are investors who were solicited by Gina Champion-Cain to provide funds that purportedly were to be used for high-interest, short-term loans to parties seeking to acquire California alcoholic beverage licenses. Plaintiffs contend that under California state law, alcoholic beverage license applicants are required to escrow an amount equal to the license purchase price while their applications remain pending with the State. It is further alleged that Chicago Title Company participated with Ms. Champion-Cain and her entities in a fraud scheme involving an escrow account maintained by Chicago Title Company into which the plaintiffs’ funds were deposited. The lawsuits are as follows: On October 22, 2019, a lawsuit styled, Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co., Chicago Title Co., was filed in the United States District Court for the Southern District of California. Plaintiffs claim losses of more than $75 million as a result of the alleged fraud scheme, and also seek consequential, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case. On November 5, 2019, a putative class action lawsuit styled, Blake E. Allred and Melissa M. Allred v. Chicago Title Co., Chicago Title Ins. Co., Adelle E. Ducharme, Betty Elixman, Gina Champion-Cain, Joelle Hanson, Cris Torres, and Rachel Bond, was filed in the United States District Court for the Southern District of California. Plaintiffs seek class certification and consequential, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case. On December 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, and ABC Funding Strategies, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses of more than $250 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On March 6, 2020, a lawsuit styled, Wakefield Capital, LLC, Wakefield Investments, LLC, 2Budz Holding, LLC, Doug and Kristine Heidrich, and Jeff and Heidi Orr v. Chicago Title Co. and Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $7.0 million as a result of the alleged fraud scheme, and also seek punitive damages, recovery of attorneys’ fees, and disgorgement. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On March 16, 2020, a lawsuit styled, Randolph L. Levin, et al., v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, Betty Elixman, et al., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $38 million as a result of the alleged fraud scheme, and also seek punitive damages and the recovery of attorneys’ fees. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On May 29, 2020, a lawsuit styled, Mark Atherton, et al., v. Chicago Title Co. and Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses of more than $30 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages, as well as the recovery of attorneys’ fees. The Named Companies are investigating and will file a response on or before the due date. On June 29, 2020, a lawsuit styled, Susan Heller Fenley Separate Property Trust, DTD 03/04/2010, Susan Heller Fenley Inherited Roth IRA, Shelley Lynn Tarditi Trust and ROJ, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $6 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are investigating and will file a response on or before the due date. On June 29, 2020, a lawsuit styled, Yuan Yu and Polly Yu v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $1 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are investigating and will file a response on or before the due date. On July 7, 2020, a cross-claim styled, Laurie Peterson v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in an existing lawsuit styled, Banc of California, National Association v. Laurie Peterson, which is pending in Superior Court of San Diego County for the State of California. Cross-complaint plaintiff was sued by a bank to recover more than $35 million that she allegedly guaranteed to repay based upon a loan to one of the investors, which is purportedly in default as a result of the alleged fraud scheme. Cross-complaint plaintiff has, in turn, sued the Named Companies in that action for monetary losses as well as exemplary damages and attorneys’ fees. The Named Companies are investigating and will file a response on or before the due date. In addition, the Chicago Title Company recently resolved a claim from another group of alleged investors under confidential terms during a pre-suit mediation. At this time, the Company is unable to ascertain its liability, if any, and is unable to make an estimate of a reasonably possible claim loss for any of these claims due to the complex nature of the claims and litigation, the early procedural status of each claim (involving unresolved questions of fact without any rulings on the merits or determinations of liability), the extent of discovery not yet conducted, potential insurance coverage, and an incomplete evaluation of possible defenses, counterclaims, crossclaims or third-party claims that may exist. Moreover, it is likely that in some instances, the claims listed above are duplicative. The Company, however, has recorded an incurred claim loss reserve for legal fees related to these matters as of June 30, 2020, which is included in its consolidated reserve for claim losses. As further information becomes available, the Company will continue to evaluate the adequacy of its consolidated reserve for claim losses. We continually upda te loss reserve estimates as new information becomes known, new loss patterns emerge or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors. Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate. Our U.S. insurance subsidiaries, FGL Insurance, Fidelity & Guaranty Life Insurance Company of New York ("FGL NY Insurance"), and Raven Re, file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners (“NAIC”) that are prepared in accordance with Statutory Accounting Principles (“SAP”) prescribed or permitted by such authorities, which may vary materially from GAAP. Prescribed SAP includes the Accounting Practices and Procedures Manual of the NAIC as well as state laws, regulations and administrative rules. Permitted SAP encompasses all accounting practices not so prescribed. The principal differences between SAP financial statements and financial statements prepared in accordance with GAAP are that SAP financial statements do not reflect DAC, DSI and VOBA, some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contractholder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted. Accordingly, SAP operating results and SAP capital and surplus may differ substantially from amounts reported in the GAAP basis financial statements for comparable items. FSRC (Cayman), F&G Re (Bermuda), and F&G Life Re (Bermuda) file financial statements with their respective regulators that are based on U.S. GAAP. FGL Insurance applies Iowa-prescribed accounting practices that permit Iowa-domiciled insurers to report equity call options used to economically hedge FIA index credits at amortized cost for statutory accounting purposes and to calculate FIA statutory reserves such that index credit returns will be included in the reserve only after crediting to the annuity contract. This resulted in a $57 million decrease to statutory capital and surplus at June 30, 2020. FGL Insurance’s statutory carrying value of Raven Re reflects the effect of permitted practices Raven Re received to treat the available amount of a letter of credit as an admitted asset which increased Raven Re’s statutory capital and surplus by $100 million at June 30, 2020. Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL Insurance which increased Raven Re’s statutory capital and surplus by $4 million at June 30, 2020. Without such permitted statutory accounting practices Raven Re’s statutory capital and surplus (deficit) would be $(11) million as of June 30, 2020, and its risk-based capital would fall below the minimum regulatory requirements. The letter of credit facility is collateralized by NAIC 1 rated debt securities. If the permitted practice was revoked, the letter of credit could be replaced by the collateral assets with Nomura’s consent. FGL Insurance’s statutory carrying value of Raven Re at June 30, 2020 was $93 million. As of June 30, 2020, FGL NY Insurance did not follow any prescribed or permitted statutory accounting practices that differ from the NAIC's statutory accounting practices. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or non-performance risk, which may include our own credit risk. We estimate an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market for that asset or liability in the absence of a principal market as opposed to the price that would be paid to acquire the asset or assume a liability (“entry price”). We categorize financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique. The three-level hierarchy for fair value measurement is defined as follows: Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads, and yield curves. Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date based on the best information available in the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult. In addition to the unobservable inputs, Level 3 fair value investments may include observable components, which are components that are actively quoted or can be validated to market-based sources. The carrying amounts and estimated fair values of our financial instruments for which the disclosure of fair values is required, including financial assets and liabilities measured and carried at fair value on a recurring basis, with the exception of investment contracts, portions of other long-term investments and debt which are disclosed later within this footnote, was summarized according to the hierarchy previously described, as follows (in millions): June 30, 2020 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 2,353 $ — $ — $ 2,353 $ 2,353 Fixed maturity securities, available-for-sale: Asset-backed securities — 4,594 1,016 5,610 5,610 Commercial mortgage-backed securities — 2,556 26 2,582 2,582 Corporates — 11,750 1,264 13,014 13,014 Hybrids 286 713 4 1,003 1,003 Municipals — 1,428 40 1,468 1,468 Residential mortgage-backed securities — 418 509 927 927 U.S. Government — 311 — 311 311 Foreign Governments — 183 16 199 199 Equity securities 702 — 1 703 703 Preferred securities 502 701 — 1,203 1,203 Derivative investments 1 332 — 333 333 Short term investments 209 — — 209 209 Other long-term investments — — 44 44 44 Total financial assets at fair value $ 4,053 $ 22,986 $ 2,920 $ 29,959 $ 29,959 Liabilities Fair value of future policy benefits — — 5 5 5 Derivatives: FIA embedded derivatives, included in contractholder funds — — 2,952 2,952 2,952 Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities — 35 — 35 35 Total financial liabilities at fair value $ — $ 35 $ 2,957 $ 2,992 $ 2,992 December 31, 2019 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 1,376 $ — $ — $ 1,376 $ 1,376 Fixed maturity securities, available-for-sale: Commercial mortgage-backed securities — 22 — 22 22 Corporates — 1,540 17 1,557 1,557 Hybrids — 30 — 30 30 Municipals — 93 — 93 93 Residential mortgage-backed securities — 40 — 40 40 U.S. Government — 288 — 288 288 Foreign Governments — 60 — 60 60 Preferred securities 65 258 — 323 323 Equity securities 810 — 1 811 811 Short term investments 876 — — 876 876 Other long-term investments — — 120 120 120 Total financial assets at fair value $ 3,127 $ 2,331 $ 138 $ 5,596 $ 5,596 Valuation Methodologies Fixed Maturity Securities & Equity Securities We measure the fair value of our securities based on assumptions used by market participants in pricing the security. The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity or equity security, and we will then consistently apply the valuation methodology to measure the security’s fair value. Our fair value measurement is based on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable securities. Sources of inputs to the market approach include third-party pricing services, independent broker quotations, or pricing matrices. We use observable and unobservable inputs in our valuation methodologies. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. In addition, market indicators and industry and economic events are monitored and further market data will be acquired when certain thresholds are met. For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable. The significant input used in the fair value measurement of equity securities for which the market approach valuation technique is employed is yield for comparable securities. Increases or decreases in the yields would result in lower or higher, respectively, fair value measurements. For broker-quoted only securities, quotes from market makers or broker-dealers are obtained from sources recognized to be market participants. We believe the broker quotes are prices at which trades could be executed based on historical trades executed at broker-quoted or slightly higher prices. We have an equity investment in a private business development company which is not traded on an exchange or valued by other sources such as analytics or brokers. We base the fair value of this investment on an estimated net asset value provided by the investee. We did not make any adjustments to this valuation. We analyze the third-party valuation methodologies and related inputs to perform assessments to determine the appropriate level within the fair value hierarchy. However, we did not adjust prices received from third parties as of June 30, 2020 or December 31, 2019. Derivative Financial Instruments The fair value of call option is based upon valuation pricing models, which represents what we would expect to receive or pay at the balance sheet date if we canceled the options, entered into offsetting positions, or exercised the options. Fair values for these instruments are determined internally, based on industry accepted valuation pricing models which use market-observable inputs, including interest rates, yield curve volatilities, and other factors. The fair value of futures contracts represents the cumulative unsettled variation margin (open trade equity, net of cash settlements) which represents what we would expect to receive or pay at the balance sheet date if we canceled the contracts or entered into offsetting positions. These contracts are classified as Level 1. The fair value measurement of the FIA embedded derivatives included in contractholder funds is determined through a combination of market observable information and significant unobservable inputs using the option budget method. The market observable inputs are the market value of option and treasury rates. The significant unobservable inputs are the budgeted option cost (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature), surrender rates, mortality multiplier and non-performance spread. The mortality multiplier at June 30, 2020 was applied to the Annuity 2000 mortality tables. Increases or decreases in the market value of an option in isolation would result in a higher or lower, respectively, fair value measurement. Increases or decreases in treasury rates, mortality multiplier, surrender rates, or non-performance spread in isolation would result in a lower or higher fair value measurement, respectively. Generally, a change in any one unobservable input would not directly result in a change in any other unobservable input. The fair value of the reinsurance-related embedded derivative in the funds withheld reinsurance agreement with Kubera Insurance (SAC) Ltd. ("Kubera") is estimated based upon the fair value of the assets supporting the funds withheld from reinsurance liabilities. The fair value of the assets is based on a quoted market price of similar assets (Level 2), and therefore the fair value of the embedded derivative is based on market-observable inputs and classified as Level 2. Please see Note P Reinsurance for further discussion on F&G reinsurance agreements. Other long-term investments Fair value of the available-for-sale embedded derivative is based on an unobservable input, the net asset value of the fund at the balance sheet date. The embedded derivative is similar to a call option on the net asset value of the fund with a strike price of zero since Fidelity & Guaranty Life Insurance Company ("FGL Insurance") will not be required to make any additional payments at maturity of the fund-linked note in order to receive the net asset value of the fund on the maturity date. A Black-Scholes model determines the net asset value of the fund as the fair value of the call option regardless of the values used for the other inputs to the option pricing model. The net asset value of the fund is provided by the fund manager at the end of each calendar month and represents the value an investor would receive if it withdrew its investment on the balance sheet date. Therefore, the key unobservable input used in the Black-Scholes model is the value of the fund. As the value of the fund increases or decreases, the fair value of the embedded derivative will increase or decrease. See further discussion on the available-for-sale embedded derivative in Note F Derivative Financial Instruments . The fair value of the credit-linked note is based on a weighted average of a broker quote and a discounted cash flow analysis. The discounted cash flow approach is based on the expected portfolio cash flows and amortization schedule reflecting investment expectations, adjusted for assumptions on the portfolio's default and recovery rates, and the note's discount rate. The fair value of the note is provided by the fund manager at the end of each quarter. Future Policy Benefits Front Street Re Cayman Ltd. ("FSRC") elected to apply the Fair Value Option to account for its future policy benefits liability related to its assumed reinsurance. FSRC uses a discounted cash flows approach to measure the fair value of the Future Policy Benefits Reserve. The cash flows associated with future policy premiums and benefits are generated using best estimate assumptions (plus a risk margin, where applicable) and are consistent with market prices, where available. Risk margins are typically applied to non-observable, non-hedgeable market inputs. The significant unobservable inputs used in the fair value measurement of the FSRC future policy benefit liability are non-performance risk spread and risk margin to reflect uncertainty. Undiscounted cash flows used in our June 30, 2020 discounted cash flow model equaled $(5) million. Increases or decreases in non-performance risk spread and risk margin to reflect uncertainty would result in a lower or higher fair value measurement, respectively. Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of June 30, 2020 are as follows: Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average) June 30, 2020 (in millions) June 30, 2020 Assets Asset-backed securities $ 763 Broker-quoted Offered quotes 98.66% - 122.19% (104.48)% Asset-backed securities 253 Third-Party Valuation Offered quotes 0.00% - 112.65% (83.58)% Commercial mortgage-backed securities 26 Broker-quoted Offered quotes 89.90% - 126.22% (125.18)% Corporates 317 Broker-quoted Offered quotes 13.70% - 111.18% (102.46)% Corporates 947 Third-Party Valuation Offered quotes 84.04% - 124.53% (105.51)% Hybrids 4 Third-Party Valuation Offered quotes 109.54% - 109.54% (109.54)% Municipals 40 Third-Party Valuation Offered quotes 122.62% - 122.62% (122.62)% Residential mortgage-backed securities 509 Broker-quoted Offered quotes 0.00% - 106.86% (106.86)% Foreign governments 16 Third-Party Valuation Offered quotes 98.72% - 99.90% (99.53)% Equity securities 1 Income-Approach Yield 2.61% Other long-term assets: Available-for-sale embedded derivative 21 Black Scholes model Market value of fund 100.00% Credit Linked Note 23 Broker-quoted Offered quotes 100.00% Total financial assets at fair value $ 2,920 Liabilities Future policy benefits 5 Discounted cash flow Non-performance spread 0.00% Risk margin to reflect uncertainty 0.00% - 0.50% (0.50)% Derivatives: FIA embedded derivatives, included in contractholder funds 2,952 Discounted cash flow Market value of option 0.00% - 40.32% (2.22)% Treasury rates 0.13% - 1.41% (0.77)% Mortality multiplier 80.00% - 80.00% (80.00)% Surrender rates 0.50% - 75.00% (5.72)% Partial withdrawals 2.00% - 3.50% (2.55)% Non-performance spread 1.19% - 1.19% (1.19)% Option cost 0.05% - 16.61% (2.19)% Total financial liabilities at fair value $ 2,957 The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and six months ended June 30, 2020 and 2019, respectively. F&G related activit y for the three and six months ended June 30, 2020 in the tables below is comprised of the one-month period ended June 30, 2020 only. This summary excludes any impact of amortization of VOBA, DAC and DSI. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. Three months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 14 1,238 — 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Total assets at Level 3 fair value $ 15 $ 2,754 $ — $ 22 $ 92 $ — $ (23) $ 60 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — (a) The net transfers out of Level 3 during the three months ended June 30, 2020 were exclusively to Level 2. Six months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 17 1,238 (3) 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Other long-term investment 120 — (61) — — — — (59) — — Total assets at Level 3 fair value $ 138 $ 2,754 $ (64) $ 22 $ 92 $ — $ (23) $ 1 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — ( a) The net transfers out of Level 3 during the six months ended June 30, 2020 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1. Three months ended June 30, 2019 (in millions) Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 18 — — — — — (2) 16 Other invested assets: Other long-term investment 107 5 — — — — — 112 Total assets at Level 3 fair value $ 125 $ 5 $ — $ — $ — $ — $ (2) $ 128 Six months ended June 30, 2019 Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 17 1 (1) 5 (1) — (5) 16 Other invested assets: Other long-term investment 101 11 — — — — — 112 Total assets at Level 3 fair value $ 118 $ 12 $ (1) $ 5 $ (1) $ — $ (5) $ 128 Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments. Mortgage Loans The fair value of mortgage loans is established using a discounted cash flow method based on internal credit rating, maturity and future income. This yield-based approach is sourced from our third-party vendor. The internal ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt service coverage, loan-to-value, quality of tenancy, borrower, and payment record. The inputs used to measure the fair value of our mortgage loans are classified as Level 3 within the fair value hierarchy. Policy Loans (included within Other long-term investments) Fair values for policy loans are estimated from a discounted cash flow analysis, using interest rates currently being offered for loans with similar credit risk. Loans with similar characteristics are aggregated for purposes of the calculations. Company Owned Life Insurance Company owned life insurance (COLI) is a life insurance program used to finance certain employee benefit expenses. The fair value of COLI is based on net realizable value, which is generally cash surrender value. COLI is classified as Level 3 within the fair value hierarchy. Other Invested Assets (included within Other long-term investments) The fair value of the bank loan is estimated using a discounted cash flow method with the discount rate based on weighted average cost of capital ("WACC"). This yield-based approach is sourced from a third-party vendor and the WACC establishes a market participant discount rate by determining the hypothetical capital structure for the asset should it be underwritten as of each period end. Other invested assets are classified as Level 3 within the fair value hierarchy. Investment Contracts Investment contracts include deferred annuities, FIAs, indexed universal life policies ("IULs") and immediate annuities. The fair value of deferred annuity, FIA, and IUL contracts is based on their cash surrender value (i.e. the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date. The fair value of immediate annuities contracts is derived by calculating a new fair value interest rate using the updated yield curve and treasury spreads as of the respective reporting date. The Company is not required to, and has not, estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Other FHLB common stock, Accounts receivable and Notes receivable are carried at cost, which approximates fair value. FHLB common stock is classified as Level 2 within the fair value hierarchy. Accounts receivable and Notes receivable are classified as Level 3 within the fair value hierarchy. Debt The fair value of debt is based on quoted market prices. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy. The following tables provide the carrying value and estimated fair value of our financial instruments that are carried on the unaudited Condensed Consolidated Balance Sheets at amounts other than fair value, summarized according to the fair value hierarchy previously described. June 30, 2020 (in millions) Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount Assets Commercial mortgage loans — — 583 583 574 Residential mortgage loans — — 1,177 1,177 1,175 Policy loans — — 26 26 30 Total $ — $ — $ 1,786 $ 1,786 $ 1,779 Liabilities Investment contracts, included in contractholder funds — — 20,666 20,666 23,683 Debt — 2,596 — 2,596 2,430 Total $ — $ 2,596 $ 20,666 $ 23,262 $ 26,113 The following table includes assets that have not been classified in the fair value hierarchy as the fair value of these investments are measured using the net asset value ("NAV") per share practical expedient. Carrying Value After Measurement (in millions) June 30, 2020 Investments in unconsolidated affiliates 1,191 For investments for which NAV is used as a practical expedient for fair value, we do not have any significant restrictions in their ability to liquidate their positions in these investments, other than obtaining general partner approval, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation. Equity method investments are reported on a lag of up to three months for investee information not received timely. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 1.25 1.00 - 1.25 June 30, 2020 LTV Ratios: Less than 50% $ 415 $ 26 $ 441 77 % $ 447 77 % 50% to 60% 102 — 102 18 % 103 18 % 60% to 75% 33 — 33 5 % 33 5 % Commercial mortgage loans $ 550 $ 26 $ 576 100 % $ 583 100 % We recognize a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At June 30, 2020, we had no CMLs that were delinquent in principal or interest payments. Allowance for Expected Credit Loss We estimate expected credit losses for our commercial loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans current performance, underlying collateral type, location, contractual life, LTV, and DSC. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on commercial mortgage loans are recognized in Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Residential Mortgage Loans Residential mortgage loans ("RMLs") represented approximately 4% of our total investments as of June 30, 2020. Our residential mortgage loans are closed end, amortizing loans and 100% of the properties are located in the United States. We diversify our RML portfolio by state to attempt to reduce concentration risk. The distribution of RMLs by state with highest-to-lowest concentration are reflected in the following tables (dollars in millions): June 30, 2020 U.S. State: Unpaid Principal Balance % of Total California $ 216 18 % Florida 198 17 % New Jersey 113 9 % All Other States (1) 664 56 % Total mortgage loans $ 1,191 100 % (1) The individual concentration of each state is less than 8% as of June 30, 2020. Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define non-performing residential mortgage loans as those that are 90 or more days past due or in nonaccrual status which is assessed monthly. The credit quality of RMLs as at June 30, 2020, was as follows (dollars in millions): June 30, 2020 Performance indicators: Carrying Value % of Total Performing $ 1,142 95 % Non-performing 59 5 % Total residential mortgage loans, gross of valuation allowance $ 1,201 100 % Allowance for expected loan loss (26) — % Total residential mortgage loans $ 1,175 100 % Loans segregated by risk rating exposure as of June 30, 2020, were as follows (in millions): June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Residential mortgages Current (less than 30 days past due) $ 231 $ 408 $ 51 $ 47 $ 62 $ 2 $ 801 30-89 days past due 72 241 25 1 2 — 341 Over 90 days past due 1 55 2 — 1 — 59 Total residential mortgages $ 304 $ 704 $ 78 $ 48 $ 65 $ 2 $ 1,201 Commercial mortgages Current (less than 30 days past due) $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 30-89 days past due — — — — — — — Over 90 days past due — — — — — — — Total commercial mortgage $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Commercial mortgages LTV Less than 50% $ 96 $ — $ 6 $ — $ — $ 339 $ 441 50% to 60% 34 — — — 11 57 102 60% to 75% 33 — — — — — 33 Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 Commercial mortgages DSCR Greater than 1.25x $ 144 $ — $ 6 $ — $ 11 $ 389 $ 550 1.00x - 1.25x 19 — — — — 7 26 Less than 1.00x — — — — — — — Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 Non-accrual loans by amortized cost as at June 30, 2020, was as follows: Amortized cost of loans on non-accrual 6/30/2020 Residential mortgage: $ 39 Commercial mortgage: — Total non-accrual loans $ 39 Allowance for Expected Credit Loss We estimate expected credit losses for our mortgage loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans' current performance, underlying collateral type, location, contractual life, LTV, and Debt to Income or FICO. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on mortgage loans are recognized in Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. Credit losses on purchase credit deteriorated (“PCD”) financial assets were recognized on the opening balance sheet for the amounts shown in the table below (in millions). June 30, 2020 Credit Losses on PCD Financial Assets Residential Mortgage Commercial Mortgage Total Provision for loan losses $ 19 $ 2 $ 21 For initial credit losses on purchased loans accounted for as PCD financial assets 7 — 7 Balance, June 30, 2020 $ 26 $ 2 $ 28 An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans as seen in the table below (in millions). 6/30/2020 Residential Mortgage $ 20 Commercial Mortgage — Total loans that are 90 days past due and still accruing $ 20 Interest and Investment Income The major sources of Interest and investment income reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Fixed maturity securities, available-for-sale $ 117 $ 18 $ 134 $ 35 Equity securities 13 2 17 4 Preferred securities 11 7 17 12 Mortgage loans 7 — 7 — Invested cash and short-term investments 8 9 33 18 Other investments 7 24 8 46 Gross investment income 163 60 216 115 Investment expense (11) (1) (11) (2) Net investment income $ 152 $ 59 $ 205 $ 113 Realized Gains and Losses, net Details underlying Realized gains and losses, net reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net realized gains on fixed maturity available-for-sale securities $ 14 $ 1 $ 24 $ — Net realized/unrealized gains (losses) on equity securities 145 42 (58) 173 Net realized/unrealized gains (losses) on preferred securities 33 4 (74) 20 Realized losses on other invested assets (3) (6) (13) (10) Change in allowance for expected credit losses (21) — (31) — Derivatives and embedded derivatives: Realized gains on certain derivative instruments 10 — 10 — Unrealized gains on certain derivative instruments 4 — 4 — Change in fair value of reinsurance related embedded derivatives (1) (21) — (21) — Change in fair value of other derivatives and embedded derivatives 1 — 1 — Realized losses on derivatives and embedded derivatives (6) — (6) — Net investment gains (losses) $ 162 $ 41 $ (158) $ 183 (1) Change in fair value of reinsurance related embedded derivatives is due to held for sale unaffiliated third party business under the fair value option election, and activity related to the FGL Insurance and Kubera reinsurance treaty. The proceeds from the sale of fixed-maturity available for-sale-securities and the gross gains and losses associated with those transactions were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Proceeds $ 320 $ 137 $ 497 $ 372 Gross gains 17 1 29 2 Gross losses (5) — (7) (1) Unconsolidated Variable Interest Entities The Company owns investments in VIEs that are not consolidated within our financial statements, and one investment in a VIE that is considered consolidated within our financial statements. VIEs do not have sufficient equity to finance their own activities without additional financial support and certain of its investors lack certain characteristics of a controlling financial interest. VIEs are consolidated by their ‘primary beneficiary’, a designation given to an entity that receives both the benefits from the VIE as well as the substantive power to make its key economic decisions. While the Company participates in the benefits from VIEs in which it invests, but does not consolidate, the substantive power to make the key economic decisions for each respective VIE resides with entities not under common control with the Company. It is for this reason that the Company is not considered the primary beneficiary for the VIE investments that are not consolidated. We have concluded we are the primary beneficiary of one VIE. The primary beneficiary conclusion was drawn given the fact that substantially all of the VIE’s activities are conducted on our behalf and we are the sole investor and limited partner. As we are considered the primary beneficiary, this VIE is consolidated within our financial statements. As of June 30, 2020, we have $65 million of net assets recorded related to this VIE. We previously executed a commitment of $83 million to purchase common shares in an unaffiliated private business development company ("BDC"). The BDC invests in secured and unsecured fixed maturity and equity securities of middle market companies in the United States. Due to the voting structure of the transaction, the Company does not have voting power. During the quarter ended June 30, 2020, the BDC was listed on the NASDAQ. We invest in various limited partnerships as a passive investor. These investments are in credit funds with a bias towards current income, real assets, or private equity. Limited partnership interests are accounted for under the equity method and are included in Investments in unconsolidated affiliates on our unaudited Condensed Consolidated Balance Sheets. Our maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in our unaudited Condensed Consolidated Balance Sheets in addition to any required unfunded commitments. As of June 30, 2020, our maximum exposure to loss was $1,111 million in recorded carrying value and $1,264 million in unfunded commitments. Investment with Related Party Included in equity securities as of June 30, 2020 and December 31, 2019 are 5,706,134 shares of Cannae common stock (NYSE: CNNE) which were purchased during the fourth quarter of 2017 in connection with the split-off of our former portfolio company investments to Cannae. The fair value of our related party investment based on quoted market prices is $234 million and $212 million as of June 30, 2020 and December 31, 2019, respectively." id="sjs-B4">Investments Our fixed maturity securities investments have been designated as available-for-sale and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of associated adjustments for DAC, VOBA, DSI, UREV, SOP 03-1 reserves, and deferred income taxes. Our equity securities investments are carried at fair value with unrealized gains and losses included in net income (loss). The Company’s consolidated investments at June 30, 2020 and December 31, 2019 are summarized as follows (in millions): June 30, 2020 Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Asset-backed securities $ 5,501 $ (2) $ 125 $ (14) $ 5,610 $ 5,610 Commercial mortgage-backed securities 2,444 — 141 (3) 2,582 2,582 Corporates 12,643 (21) 420 (28) 13,014 13,014 Hybrids 996 — 15 (8) 1,003 1,003 Municipals 1,426 — 43 (1) 1,468 1,468 Residential mortgage-backed securities 941 (5) 5 (14) 927 927 U.S. Government 299 — 12 — 311 311 Foreign Governments 195 — 5 (1) 199 199 Total available-for-sale securities 24,445 (28) 766 (69) 25,114 25,114 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Commercial mortgage-backed/asset-backed securities 22 — — 22 22 Corporates 1,510 49 (3) 1,556 1,556 Hybrids 26 5 — 31 31 Municipals 90 3 — 93 93 Residential mortgage-backed securities 38 2 — 40 40 U.S. Government 282 7 (1) 288 288 Foreign Governments 61 1 (2) 60 60 Total available-for-sale securities 2,029 67 (6) 2,090 2,090 Securities held on deposit with various state regulatory authorities had a fair value of $18.4 billion and $422 million at June 30, 2020 and December 31, 2019, respectively. At June 30, 2020 and December 31, 2019, the Company held no material investments that were non-income producing for a period greater than twelve months. At June 30, 2020 and December 31, 2019, the Company's accrued interest receivable balance was $237 million and $16 million, respectively. Accrued interest receivable is classified within Prepaid expenses and other assets within the unaudited Condensed Consolidated Balance Sheets. In accordance with our FHLB agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to the Company for general purposes. The collateral investments had a fair value of $1,511 million at June 30, 2020. The amortized cost and fair value of fixed maturity available-for-sale securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations. June 30, 2020 (in millions) Amortized Cost Fair Value Corporates, Non-structured Hybrids, Municipal and Government securities: Due in one year or less $ 417 $ 416 Due after one year through five years 2,104 2,164 Due after five years through ten years 2,236 2,307 Due after ten years 10,776 11,080 Subtotal 15,533 15,967 Other securities which provide for periodic payments: Asset-backed securities 5,501 5,610 Commercial mortgage-backed securities 2,444 2,582 Structured hybrids 26 28 Residential mortgage-backed securities 941 927 Subtotal 8,912 9,147 Total fixed maturity available-for-sale securities $ 24,445 $ 25,114 Allowance for Current Expected Credit Loss Following the adoption of ASU 2016-13 and the related targeted improvements and transition relief amendments (see Note A Recent Accounting Pronouncements for further details) effective January 1, 2020, we regularly review AFS securities for declines in fair value that we determine to be credit related. For our fixed maturity AFS securities, we generally consider the following in determining whether our unrealized losses are credit related, and if so, the magnitude of the credit loss: • The extent to which the fair value is less than the amortized cost basis; • The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); • The financial condition of and near-term prospects of the issuer (including issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength); • Current delinquencies and nonperforming assets of underlying collateral; • Expected future default rates; • Collateral value by vintage, geographic region, industry concentration or property type; • Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and • Contractual and regulatory cash obligations and the issuer's plans to meet such obligations. We recognize an allowance for current expected credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We measure the credit loss using a discounted cash flow model that utilizes the single best estimate cash flow and the recognized credit loss is limited to the total unrealized loss on the security (i.e. the fair value floor). Cash flows are discounted using the implicit yield of bonds at their time of purchase and the current book yield for asset and mortgage backed securities as well as variable rate securities. We recognize the expected credit losses in Realized gains and losses, net in the unaudited Condensed Consolidated Statements of Earnings, with an offset for the amount of non-credit impairments recognized in AOCI. We do not measure a credit loss allowance on accrued investment income because we write-off accrued interest through to Interest and investment income when collectability concerns arise. We consider the following in determining whether write-offs of a security’s amortized cost is necessary: • We believe amounts related to securities have become uncollectible; or • We intend to sell a security; or • It is more likely than not that we will be required to sell a security prior to recovery. If we intend to sell a fixed maturity AFS security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, we will write down the security to current fair value, with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. If we do not intend to sell a fixed maturity security or it is more likely than not that we will not be required to sell a fixed maturity security before recovery of its amortized cost basis but believe amounts related to a security are uncollectible (generally based on proximity to expected credit loss), an impairment is deemed to have occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. The remainder of unrealized loss is held in AOCI. The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category were as follows for the three and six months ended June 30, 2020 (in millions): For the three-months ended June 30, 2020 Additions Reductions Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Writeoffs charged against the allowance Balance at End of Period Available-for-sale securities Asset-backed securities $ — $ 7 $ (9) $ — $ — $ — $ — $ (2) Corporates (11) (2) (16) — 3 5 — (21) Hybrids — — (3) — 3 — — — Residential mortgage-backed securities — 2 (7) — — — — (5) Total available-for-sale securities $ (11) $ 7 $ (35) $ — $ — $ 6 $ 5 $ — $ (28) (1) Purchased credit deteriorated financial assets ("PCD") For the six-months ended June 30, 2020 Additions Reductions Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Writeoffs charged against the allowance Balance at End of Period Available-for-sale securities Asset-backed securities $ — $ 7 $ (9) $ — — $ — $ — $ — $ (2) Corporates — (10) (16) (3) — 3 5 — (21) Hybrids — — (3) — — 3 — — — Residential mortgage-backed securities — 2 (7) — — — — — (5) Total available-for-sale securities $ — $ (1) $ (35) $ (3) $ — $ 6 $ 5 $ — $ (28) (1) Purchased credit deteriorated financial assets ("PCD") Purchased credit-deteriorated available-for-sale debt securities ("PCD"s) are AFS securities purchased at a discount, where part of that discount is attributable to credit . Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. The following table summarizes year to date PCD AFS security purchases (in millions). Purchased credit-deteriorated available-for-sale debt securities 6/30/2020 Purchase price $ 265 Allowance for credit losses at acquisition 35 Discount (or premiums) attributable to other factors 84 AFS purchased credit-deteriorated par value $ 384 The fair value and gross unrealized losses of available-for-sale securities, excluding securities in an unrealized loss position with an allowance for expected credit loss, aggregated by investment category and duration of fair value below amortized cost as of June 30, 2020, and December 31, 2019 were as follows (dollars in millions): June 30, 2020 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Fair Value Gross Unrealized Fair Value Gross Unrealized Available-for-sale securities Asset-backed securities $ 900 $ (14) $ — $ — $ 900 $ (14) Commercial mortgage-backed securities 70 (3) — — 70 (3) Corporates 1,610 (25) 44 (3) 1,654 (28) Hybrids 422 (8) — — 422 (8) Municipals 160 (1) — — 160 (1) Residential mortgage-backed securities 570 (14) — — 570 (14) Foreign Government 35 — 6 (1) 41 (1) Total available-for-sale securities $ 3,767 $ (65) $ 50 $ (4) $ 3,817 $ (69) Total number of available-for-sale securities in an unrealized loss position less than twelve months 443 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 6 Total number of available-for-sale securities in an unrealized loss position 449 December 31, 2019 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Fair Value Gross Unrealized Fair Value Gross Unrealized Available-for-sale securities Corporates $ 98 $ (2) $ 51 $ (1) $ 149 $ (3) U.S. Government 62 (1) — — 62 (1) Foreign Government — — 33 (2) 33 (2) Total available-for-sale securities $ 160 $ (3) $ 84 $ (3) $ 244 $ (6) Total number of available-for-sale securities in an unrealized loss position less than twelve months 19 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 10 Total number of available-for-sale securities in an unrealized loss position 29 We determined the significant increase in unrealized losses as of June 30, 2020 was caused by the significant widening of spreads in fixed income markets in response to the economic uncertainty created by the COVID-19 pandemic. These widening spreads were in most cases driven by market illiquidity and perceived increases in credit risk. For securities in an unrealized loss position as of June 30, 2020 and an expected credit loss was not determined, we believe that the unrealized loss is being driven by interest rate declines or near-term illiquidity and uncertainty of the impact of COVID-19 on the economy as opposed to issuer specific credit concerns. Specific to asset-backed and mortgage-backed securities for which an expected credit loss was not determined, the effect of any increased expectations of underlying collateral defaults have not risen to the level of impacting the tranches of those securities. Mortgage Loans Our mortgage loans are collateralized by commercial and residential properties. Commercial Mortgage Loans Commercial mortgage loans ("CMLs") represented approximately 2% of the our total investments as of June 30, 2020. We primarily invest in mortgage loans on income producing properties including hotels, industrial properties, retail buildings, multifamily properties and office buildings. We diversify our CML portfolio by geographic region and property type to attempt to reduce concentration risk. We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a consistent and acceptable level to secure the related debt. The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables (dollars in millions): June 30, 2020 Gross Carrying Value % of Total Property Type: Hotel $ 19 3 % Industrial - General 37 6 % Industrial - Warehouse 12 2 % Multifamily 120 21 % Office 142 25 % Retail 150 26 % Other 96 17 % Total commercial mortgage loans, gross of valuation allowance $ 576 100 % Allowance for expected credit loss (2) Total commercial mortgage loans $ 574 U.S. Region: East North Central $ 63 11 % East South Central 51 9 % Middle Atlantic 77 13 % Mountain 48 9 % New England 43 7 % Pacific 149 26 % South Atlantic 73 13 % West North Central 13 2 % West South Central 59 10 % Total commercial mortgage loans, gross of valuation allowance $ 576 100 % Allowance for expected credit loss (2) Total commercial mortgage loans $ 574 All of our investments in CMLs had a loan-to-value ("LTV") ratio of less than 75% at June 30, 2020, as measured at inception of the loans unless otherwise updated. LTV and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.00 indicates that a property’s operations do not generate sufficient income to cover debt payments. We normalize our DSC ratios to a 25-year amortization period for purposes of our general loan allowance evaluation. The following table presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios at June 30, 2020 (dollars in millions) : Debt-Service Coverage Ratios Total Amount % of Total Estimated Fair Value % of Total >1.25 1.00 - 1.25 June 30, 2020 LTV Ratios: Less than 50% $ 415 $ 26 $ 441 77 % $ 447 77 % 50% to 60% 102 — 102 18 % 103 18 % 60% to 75% 33 — 33 5 % 33 5 % Commercial mortgage loans $ 550 $ 26 $ 576 100 % $ 583 100 % We recognize a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At June 30, 2020, we had no CMLs that were delinquent in principal or interest payments. Allowance for Expected Credit Loss We estimate expected credit losses for our commercial loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans current performance, underlying collateral type, location, contractual life, LTV, and DSC. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on commercial mortgage loans are recognized in Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Residential Mortgage Loans Residential mortgage loans ("RMLs") represented approximately 4% of our total investments as of June 30, 2020. Our residential mortgage loans are closed end, amortizing loans and 100% of the properties are located in the United States. We diversify our RML portfolio by state to attempt to reduce concentration risk. The distribution of RMLs by state with highest-to-lowest concentration are reflected in the following tables (dollars in millions): June 30, 2020 U.S. State: Unpaid Principal Balance % of Total California $ 216 18 % Florida 198 17 % New Jersey 113 9 % All Other States (1) 664 56 % Total mortgage loans $ 1,191 100 % (1) The individual concentration of each state is less than 8% as of June 30, 2020. Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define non-performing residential mortgage loans as those that are 90 or more days past due or in nonaccrual status which is assessed monthly. The credit quality of RMLs as at June 30, 2020, was as follows (dollars in millions): June 30, 2020 Performance indicators: Carrying Value % of Total Performing $ 1,142 95 % Non-performing 59 5 % Total residential mortgage loans, gross of valuation allowance $ 1,201 100 % Allowance for expected loan loss (26) — % Total residential mortgage loans $ 1,175 100 % Loans segregated by risk rating exposure as of June 30, 2020, were as follows (in millions): June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Residential mortgages Current (less than 30 days past due) $ 231 $ 408 $ 51 $ 47 $ 62 $ 2 $ 801 30-89 days past due 72 241 25 1 2 — 341 Over 90 days past due 1 55 2 — 1 — 59 Total residential mortgages $ 304 $ 704 $ 78 $ 48 $ 65 $ 2 $ 1,201 Commercial mortgages Current (less than 30 days past due) $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 30-89 days past due — — — — — — — Over 90 days past due — — — — — — — Total commercial mortgage $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Commercial mortgages LTV Less than 50% $ 96 $ — $ 6 $ — $ — $ 339 $ 441 50% to 60% 34 — — — 11 57 102 60% to 75% 33 — — — — — 33 Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 Commercial mortgages DSCR Greater than 1.25x $ 144 $ — $ 6 $ — $ 11 $ 389 $ 550 1.00x - 1.25x 19 — — — — 7 26 Less than 1.00x — — — — — — — Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 Non-accrual loans by amortized cost as at June 30, 2020, was as follows: Amortized cost of loans on non-accrual 6/30/2020 Residential mortgage: $ 39 Commercial mortgage: — Total non-accrual loans $ 39 Allowance for Expected Credit Loss We estimate expected credit losses for our mortgage loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans' current performance, underlying collateral type, location, contractual life, LTV, and Debt to Income or FICO. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on mortgage loans are recognized in Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. Credit losses on purchase credit deteriorated (“PCD”) financial assets were recognized on the opening balance sheet for the amounts shown in the table below (in millions). June 30, 2020 Credit Losses on PCD Financial Assets Residential Mortgage Commercial Mortgage Total Provision for loan losses $ 19 $ 2 $ 21 For initial credit losses on purchased loans accounted for as PCD financial assets 7 — 7 Balance, June 30, 2020 $ 26 $ 2 $ 28 An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans as seen in the table below (in millions). 6/30/2020 Residential Mortgage $ 20 Commercial Mortgage — Total loans that are 90 days past due and still accruing $ 20 Interest and Investment Income The major sources of Interest and investment income reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Fixed maturity securities, available-for-sale $ 117 $ 18 $ 134 $ 35 Equity securities 13 2 17 4 Preferred securities 11 7 17 12 Mortgage loans 7 — 7 — Invested cash and short-term investments 8 9 33 18 Other investments 7 24 8 46 Gross investment income 163 60 216 115 Investment expense (11) (1) (11) (2) Net investment income $ 152 $ 59 $ 205 $ 113 Realized Gains and Losses, net Details underlying Realized gains and losses, net reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net realized gains on fixed maturity available-for-sale securities $ 14 $ 1 $ 24 $ — Net realized/unrealized gains (losses) on equity securities 145 42 (58) 173 Net realized/unrealized gains (losses) on preferred securities 33 4 (74) 20 Realized losses on other invested assets (3) (6) (13) (10) Change in allowance for expected credit losses (21) — (31) — Derivatives and embedded derivatives: Realized gains on certain derivative instruments 10 — 10 — Unrealized gains on certain derivative instruments 4 — 4 — Change in fair value of reinsurance related embedded derivatives (1) (21) — (21) — Change in fair value of other derivatives and embedded derivatives 1 — 1 — Realized losses on derivatives and embedded derivatives (6) — (6) — Net investment gains (losses) $ 162 $ 41 $ (158) $ 183 (1) Change in fair value of reinsurance related embedded derivatives is due to held for sale unaffiliated third party business under the fair value option election, and activity related to the FGL Insurance and Kubera reinsurance treaty. The proceeds from the sale of fixed-maturity available for-sale-securities and the gross gains and losses associated with those transactions were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Proceeds $ 320 $ 137 $ 497 $ 372 Gross gains 17 1 29 2 Gross losses (5) — (7) (1) Unconsolidated Variable Interest Entities The Company owns investments in VIEs that are not consolidated within our financial statements, and one investment in a VIE that is considered consolidated within our financial statements. VIEs do not have sufficient equity to finance their own activities without additional financial support and certain of its investors lack certain characteristics of a controlling financial interest. VIEs are consolidated by their ‘primary beneficiary’, a designation given to an entity that receives both the benefits from the VIE as well as the substantive power to make its key economic decisions. While the Company participates in the benefits from VIEs in which it invests, but does not consolidate, the substantive power to make the key economic decisions for each respective VIE resides with entities not under common control with the Company. It is for this reason that the Company is not considered the primary beneficiary for the VIE investments that are not consolidated. We have concluded we are the primary beneficiary of one VIE. The primary beneficiary conclusion was drawn given the fact that substantially all of the VIE’s activities are conducted on our behalf and we are the sole investor and limited partner. As we are considered the primary beneficiary, this VIE is consolidated within our financial statements. As of June 30, 2020, we have $65 million of net assets recorded related to this VIE. We previously executed a commitment of $83 million to purchase common shares in an unaffiliated private business development company ("BDC"). The BDC invests in secured and unsecured fixed maturity and equity securities of middle market companies in the United States. Due to the voting structure of the transaction, the Company does not have voting power. During the quarter ended June 30, 2020, the BDC was listed on the NASDAQ. We invest in various limited partnerships as a passive investor. These investments are in credit funds with a bias towards current income, real assets, or private equity. Limited partnership interests are accounted for under the equity method and are included in Investments in unconsolidated affiliates on our unaudited Condensed Consolidated Balance Sheets. Our maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in our unaudited Condensed Consolidated Balance Sheets in addition to any required unfunded commitments. As of June 30, 2020, our maximum exposure to loss was $1,111 million in recorded carrying value and $1,264 million in unfunded commitments. Investment with Related Party Included in equity securities as of June 30, 2020 and December 31, 2019 are 5,706,134 shares of Cannae common stock (NYSE: CNNE) which were purchased during the fourth quarter of 2017 in connection with the split-off of our former portfolio company investments to Cannae. The fair value of our related party investment based on quoted market prices is $234 million and $212 million as of June 30, 2020 and December 31, 2019, respectively. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The carrying amounts of derivative instruments, including derivative instruments embedded in FIA contracts, as of June 30, 2020 is as follows (in millions): June 30, 2020 Assets: Derivative investments: Call options $ 332 Futures contracts 1 Other long-term investments: Other embedded derivatives 21 $ 354 Liabilities: Contractholder funds: FIA embedded derivative $ 2,952 Other liabilities: Reinsurance related embedded derivative 35 $ 2,987 The change in fair value of derivative instruments included in the accompanying unaudited Condensed Consolidated Statements of Earnings is as follows (in millions): Three Months Ended June 30, 2020 Net investment gains (losses): Call options $ 12 Futures contracts 2 Foreign currency forward — Other derivatives and embedded derivatives 1 Reinsurance related embedded derivatives (21) Total net investment losses $ (6) Benefits and other changes in policy reserves: FIA embedded derivatives $ 100 Additional Disclosures FIA Embedded Derivative and Call Options and Futures We have FIA Contracts that permit the holder to elect an interest rate return or an equity index linked component, where interest credited to the contracts is linked to the performance of various equity indices, primarily the S&P 500 Index. This feature represents an embedded derivative under GAAP. The FIA embedded derivative is valued at fair value and included in the liability for contractholder funds in the accompanying unaudited Condensed Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in the unaudited Condensed Consolidated Statements of Earnings. See a description of the fair value methodology used in Note E Fair Value of Financial Instruments . We purchase derivatives consisting of a combination of call options and futures contracts on the applicable market indices to fund the index credits due to FIA contractholders. The call options are one two three five respective anniversary dates of the index policies, the index used to compute the interest credit is reset and we purchases new one two three five Other market exposures are hedged periodically depending on market conditions and our risk tolerance. Our FIA hedging strategy economically hedges the equity returns and exposes us to the risk that unhedged market exposures result in divergence between changes in the fair value of the liabilities and the hedging assets. We use a variety of techniques, including direct estimation of market sensitivities, to monitor this risk daily. We intend to continue to adjust the hedging strategy as market conditions and our risk tolerance changes. Credit Risk We are exposed to credit loss in the event of non-performance by its counterparties on the call options and reflects assumptions regarding this non-performance risk in the fair value of the call options. The non-performance risk is the net counterparty exposure based on the fair value of the open contracts less collateral held. We maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement. Information regarding our exposure to credit loss on the call options it holds as of June 30, 2020, is presented in the following table (in millions): June 30, 2020 Counterparty Credit Rating Notional Fair Value Collateral Net Credit Risk Merrill Lynch AA-/*/A+ $ 2,873 $ 34 $ — $ 34 Deutsche Bank BBB/A3/BBB+ 23 1 1 — Morgan Stanley */A1/A+ 2,086 23 19 4 Barclay's Bank A+/A1/A 4,259 141 136 5 Canadian Imperial Bank of Commerce AA/Aa2/A+ 2,055 52 48 4 Wells Fargo A+/A2/A- 2,986 74 69 5 Goldman Sachs A/A3/BBB+ 738 7 5 2 Total $ 15,020 $ 332 $ 278 $ 54 (1) An * represents credit ratings that were not available. Collateral Agreements The Company is required to maintain minimum ratings as a matter of routine practice as part of its over-the-counter derivative agreements on ISDA forms. Under some ISDA agreements, the Company has agreed to maintain certain financial strength ratings. A downgrade below these levels provides the counterparty under the agreement the right to terminate the open option contracts between the parties, at which time any amounts payable by the Company or the counterparty would be dependent on the market value of the underlying option contracts. The Company's current rating doesn't allow any counterparty the right to terminate ISDA agreements. In certain transactions, the Company and the counterparty have entered into a collateral support agreement requiring either party to post collateral when the net exposures exceed pre-determined thresholds. For all counterparties, except one, this threshold is set to zero. As of June 30, 2020, counterparties posted $278 million of collateral of which $278 million is included in Cash and cash equivalents with an associated payable for this collateral included in Accounts payable and accrued liabilities on the unaudited Condensed Consolidated Balance Sheet. Accordingly, the maximum amount of loss due to credit risk that the Company would incur if parties to the call options failed completely to perform according to the terms of the contracts was $54 million at June 30, 2020. The Company is required to pay counterparties the effective federal funds rate each day for cash collateral posted to F&G for daily mark to market margin changes. The Company reinvests derivative cash collateral to reduce the interest cost. Cash collateral is invested in overnight investment sweep products which are included in Cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheets. The Company held 559 futures contracts at June 30, 2020. The fair value of the futures contracts represents the cumulative unsettled variation margin (open trade equity, net of cash settlements). The Company provides cash collateral to the counterparties for the initial and variation margin on the futures contracts which is included in Cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheets. The amount of cash collateral held by the counterparties for such contracts was $6 million at June 30, 2020. Reinsurance Related Embedded Derivatives FGL Insurance entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain MYGA and deferred annuity statutory reserve on a coinsurance funds withheld basis, net of applicable existing reinsurance. This arrangement creates an obligation for FGL Insurance to pay Kubera at a later date, which results in an embedded derivative. This embedded derivative is considered a total return swap with contractual returns that are attributable to the assets and liabilities associated with this reinsurance arrangement. The fair value of the total return swap is based on the change in fair value of the underlying assets held in the funds withheld portfolio. Investment results for the assets that support the coinsurance with funds withheld reinsurance arrangement, including gains and losses from sales, were passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement. The reinsurance related embedded derivative is reported in Prepaid expenses and other assets if in a net gain position, or Accounts payable and accrued liabilities, if in a net loss position, on the unaudited Condensed Consolidated Balance Sheets and the related gains or losses are reported in Realized gains and losses, net on the unaudited Condensed Consolidated Statements of Earnings. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable Notes payable consists of the following: June 30, December 31, (In millions) 4.50% Notes, net of discount $ 443 $ 443 5.50% Notes, net of discount 399 398 3.40% Notes, net of discount 643 — Term Loan 358 — Revolving Credit Facility (2) (3) 5.50% F&G Notes, net of discount 589 — F&G Credit Facility — — $ 2,430 $ 838 On June 12, 2020, we completed our underwritten public offering of $650 million aggregate principal amount of the 3.40% Notes due June 15, 2030 (the “3.40% Notes”) pursuant to an effective registration statement filed with the Securities and Exchange Commission ("SEC"). The net proceeds from the registered offering of the 3.40% Notes were approximately $642 million, after deducting underwriting discounts, and commissions and offering expenses. We used the net proceeds from the offering (i) to repay $640 million of the outstanding principal amount under the Term Loan, and (ii) for general corporate purposes. On June 1, 2020, as a result of the F&G acquisition, we assumed a $250 million senior unsecured revolving credit facility with a maturity date of November 30, 2020 (the “F&G Credit Agreement”), originally entered into by subsidiaries of F&G on November 30, 2017. The F&G Credit Agreement was entered into with certain financial institutions party thereto, as lenders, and Royal Bank of Canada, as administrative agent and letter of credit issuer. Various financing options are available within the Credit Agreement, including overnight and term based borrowing. In each case, a margin is ascribed based on the Debt to Capitalization ratio of CF Bermuda Holdings Limited, a Bermuda exempted limited liability company and wholly owned direct subsidiary of F&G. The loan proceeds from the F&G Credit Agreement may be used for working capital and general corporate purposes. As of June 30, 2020, there was no principal outstanding and $250 million of available borrowing capacity under the F&G Credit Agreement. On June 1, 2020, as a result of the F&G acquisition, we assumed $550 million aggregate principal amount of 5.50% senior notes due 2025 (the "F&G Senior Notes"), originally issued on April 20, 2018 at 99.5% of face value for proceeds of $547 million. In connection with the acquisition of F&G, on April 22, 2020, we entered into the Term Loan Agreement that provides for an aggregate principal borrowing of $1.0 billion with Bank of America, N.A, as the Administrative Agent, JPMorgan Chase Bank, N.A., as syndication agent, and the Term Lenders, pursuant to which the Term Lenders provided the $1.0 billion Term Loan. The Term Loan matures on April 21, 2021 and generally accrues interest based on a fluctuating rate per annum based on either (i) the base rate (which is equal to the highest of (a) the federal funds rate plus 0.5% of 1%, (b) the Administrative Agent’s "prime rate," and (c) LIBOR plus 1% (with a floor of 1.75%)), plus a margin of between 1% and 2% depending on the FNF Debt Rating or (ii) LIBOR (with a floor of 0.75%) plus a margin of between 2% and 0.03 depending on the FNF Debt Rating. On June 1, 2020, we drew down the full $1.0 billion in aggregate principal to fund a portion of the acquisition of F&G. On June 12, 2020 we repaid $640 million of principal on the Term Loan and an additional $100 million of principal on July 31, 2020. On August 13, 2018, we completed an offering of $450 million in aggregate principal amount of 4.50% notes due August 2028 (the "4.50% Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 4.50% Notes were priced at 99.252% of par to yield 4.594% annual interest. We pay interest on the 4.50% Notes semi-annually on the 15th of February and August, beginning February 15, 2019. The 4.50% Notes contain customary covenants and events of default for investment grade public debt, which primarily relate to failure to make principal or interest payments. On May 16, 2019, we completed an offering to exchange the 4.50% Notes for substantially identical notes registered pursuant to Rule 424 under the Securities Act of 1933 (the "4.50% Notes Exchange"). There were no material changes to the terms of the 4.50% Notes as a result of the 4.50% Notes Exchange and all holders of the 4.50% Notes accepted the offer to exchange. On April 27, 2017, we entered into a Fourth Amended and Restated Credit Agreement that provides for our $800 million revolving credit facility (the Revolving Credit Facility) with Bank of America, N.A., as administrative agent and the other agents party thereto (the "Restated Credit Agreement").The material terms of the Restated Credit Agreement are set forth in our Annual Report for the year ended December 31, 2019. As of June 30, 2020, there was no principal outstanding, $2 million of unamortized debt issuance costs, and $800 million of available borrowing capacity under the Revolving Credit Facility. On August 28, 2012, we completed an offering of $400 million in aggregate principal amount of 5.50% notes due September 2022 (the "5.50% Notes"), pursuant to an effective registration statement previously filed with the SEC. The material terms of the 5.50% Notes are set forth in our Annual Report for the year ended December 31, 2019. Gross principal maturities of notes payable at June 30, 2020 are as follows (in millions): 2020 (remaining) $ — 2021 360 2022 400 2023 — 2024 — Thereafter 1,650 $ 2,410 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal and Regulatory Contingencies In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. With respect to our title insurance operations, this customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. See Note C Summary of Reserve for Title Claim Losses for further discussion of claim and accrual. Additionally, like other companies, our ordinary course litigation includes a number of class action and purported class action lawsuits, which make allegations related to aspects of our operations. We believe that no actions, other than the matters discussed below, if any, depart from customary litigation incidental to our business. We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Our accrual for legal and regulatory matters was $22 million as of June 30, 2020 and December 31, 2019. None of the amounts we have currently recorded are considered to be material to our financial condition individually or in the aggregate. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition. In a class action captioned, Patterson, et al. v. Fidelity National Title Insurance Company, et al ., originally filed on October 27, 2003, and pending in the Court of Common Pleas of Allegheny County, Pennsylvania, plaintiffs allege the named Company underwriters violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) by failing to provide premium discounts in accordance with filed rates in refinancing transactions. Contrary to rulings in similar federal court cases that considered the rate rule and agreed with the Company’s position, the court held that the rate rule should be interpreted such that an institutional mortgage in the public record is a “proxy” for prior title insurance entitling a consumer to a discount rate when refinancing when there is a mortgage of record within the number of years required by the rate rule. The rate rule requires sufficient evidence of a prior policy, and because not all institutional mortgages were insured, the Company’s position is that a recorded first mortgage alone does not constitute sufficient evidence of an earlier policy entitling consumers to a discounted rate. The court certified the class refusing to follow prior Pennsylvania Supreme Court and appellate court decisions holding that the UTPCPL requires proof of reliance, an individual issue that precludes certification. After notice to the class, plaintiffs moved for partial summary judgment on liability, and defendants moved for summary judgment. On June 27, 2018, the court entered an order granting plaintiffs’ motion for partial summary judgment on liability, and denying the Company’s motion. The court also determined that a multiplier of 1.5, not treble, should be applied to the amount of damages, if any, proven by class members at trial, and that Plaintiffs should bear the responsibility of identifying class members and calculating damages. The Company’s requests for interlocutory appeals of both the liability and damage multiplier issues were denied. The parties reached an agreement to resolve the matter on a class wide basis, and the claims period ended with no objectors. Final judgment approving the class action settlement has been entered, and settlement payments are expected to be completed over the next 60 days. We do not believe the settlement will have a material adverse effect on our financial condition. On August 4, 2020, a stockholder derivative lawsuit styled, City of Miami General Employees’ and Sanitation Employees’ Retirement Trust v. Fidelity National Financial, et al. , was filed in the Court of Chancery of the State of Delaware against the Company, its Board of Directors and others alleging breach of fiduciary duties as directors and officers relating to FNF’s acquisition of F&G. We will vigorously defend this matter and we do not believe the result will have a material adverse effect on our financial condition. From time to time we receive inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies about various matters relating to our business. Sometimes these take the form of civil investigative demands or subpoenas. We cooperate with all such inquiries and we have responded to or are currently responding to inquiries from multiple governmental agencies. Also, regulators and courts have been dealing with issues arising from foreclosures and related processes and documentation. Various governmental entities are studying the title insurance product, market, pricing, and business practices, and potential regulatory and legislative changes, which may materially affect our business and operations. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with such authorities which may require us to pay fines or claims or take other actions. We do not anticipate such fines and settlements, either individually or in the aggregate, will have a material adverse effect on our financial condition. Acquired Contingencies - F&G We have received inquiries from a number of state regulatory authorities regarding our use of the U.S. Social Security Administration’s Death Master File (“Death Master File”) and compliance with state claims practices regulations and unclaimed property or escheatment laws. We have established procedures to periodically compare our in-force life insurance and annuity policies against the Death Master File or similar databases; investigate any identified potential matches to confirm the death of the insured; and determine whether benefits are due and attempt to locate the beneficiaries of any benefits due or, if no beneficiary can be located, escheat the benefit to the state as unclaimed property. We believe we have established sufficient reserves with respect to these matters; however, it is possible that third parties could dispute these amounts and additional payments or additional unreported claims or liabilities could be identified which could be significant and could have a material adverse effect on our results of operations. On May 26, 2020, F&G received notice that Kingfishers, L.P., Kingstown Partners Master LTD, Kingstown Partners II, L.P., Kingstown 1740 Fund, L.P., and Ktown, L.P. (together "Kingstown Dissenters") were asserting their appraisal right relative to their ownership of 12 million shares of F&G stock. On June 1, 2020, the date of the acquisition of F&G, the Kingstown Dissenters did not receive the merger consideration. Under Cayman Companies Law, holders of F&G common stock who follow applicable Cayman Companies Law procedure relating to appraisal rights are entitled, in lieu of receiving the merger consideration, to have the "fair value" of their shares determined by the Grand Court of the Cayman Islands paid to them in cash together with a fair rate of interest unless decided otherwise by the Grand Court of the Cayman Islands. We do not believe this matter will have a material impact on our results of operations. The resolution of this matter may impact our cash flow in the future if we are required to remit the entire merger consideration in cash. F&G Commitments The Company has unfunded investment commitments as of June 30, 2020 based upon the timing of when investments are executed compared to when the actual investments are funded, as some investments require that funding occur over a period of months or years. A summary of unfunded commitments by invested asset class as of June 30, 2020 is included below (in millions): June 30, 2020 Asset Type Investment in unconsolidated affiliates $ 1,264 Fixed maturity securities, available-for-sale 177 Other assets 145 Residential mortgage loans 13 Total $ 1,599 |
Dividends
Dividends | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Dividends | DividendsOn July 22, 2020, our Board of Directors declared cash dividends of $0.33 per share, payable on September 30, 2020, to FNF common shareholders of record as of September 16, 2020. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Summarized financial information concerning our reportable segments is shown in the following tables. On June 1, 2020, we completed our acquisition of F&G. As a result we have a new segment as of and for the three and six month periods ended June 30, 2020, F&G, which contains our fixed annuity and life insurance businesses. As of and for the three months ended June 30, 2020: Title F&G Corporate and Other Total (In millions) Title premiums $ 1,359 $ — $ 1,359 Other revenues 655 20 72 747 Revenues from external customers 2,014 20 72 2,106 Interest and investment income, including realized gains and losses 210 104 — 314 Total revenues 2,224 124 72 2,420 Depreciation and amortization 37 3 6 46 Interest expense 1 3 17 21 Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates 528 (58) (69) 401 Income tax expense (benefit) 130 (14) (27) 89 Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates 398 (44) (42) 312 Equity in earnings (loss) of unconsolidated affiliates 2 — (1) 1 Net earnings (loss) $ 400 $ (44) $ (43) $ 313 Assets $ 8,875 $ 38,311 $ 815 $ 48,001 Goodwill 2,462 1,725 265 4,452 As of and for the three months ended June 30, 2019: Title Corporate and Other Total (In millions) Title premiums $ 1,379 $ — $ 1,379 Other revenues 613 52 665 Revenues from external customers 1,992 52 2,044 Interest and investment income, including realized gains and losses 100 — 100 Total revenues 2,092 52 2,144 Depreciation and amortization 38 6 44 Interest expense — 12 12 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 387 (34) 353 Income tax expense (benefit) 95 (9) 86 Earnings (loss) before equity in earnings of unconsolidated affiliates 292 (25) 267 Equity in earnings of unconsolidated affiliates 3 — 3 Net earnings (loss) $ 295 $ (25) $ 270 Assets $ 9,040 $ 1,149 $ 10,189 Goodwill 2,461 264 2,725 As of and for the six months ended June 30, 2020: Title F&G Corporate and Other Total (In millions) Title premiums $ 2,637 $ — $ — $ 2,637 Other revenues 1,265 20 63 1,348 Revenues from external customers 3,902 20 63 3,985 Interest and investment income, including realized gains and losses (55) 104 (2) 47 Total revenues 3,847 124 61 4,032 Depreciation and amortization 74 3 12 89 Interest expense 1 3 29 33 Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates 475 (58) (102) 315 Income tax expense (benefit) 111 (14) (36) 61 Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates 364 (44) (66) 254 Equity in earnings (loss) of unconsolidated affiliates 3 — (1) 2 Net earnings (loss) $ 367 $ (44) $ (67) $ 256 Assets $ 8,875 $ 38,311 $ 815 $ 48,001 Goodwill 2,462 1,725 265 4,452 As of and for the six months ended June 30, 2019: Title Corporate and Other Total (In millions) Title premiums $ 2,371 $ — $ 2,371 Other revenues 1,094 105 1,199 Revenues from external customers 3,465 105 3,570 Interest and investment income, including realized gains and losses 290 6 296 Total revenues 3,755 111 3,866 Depreciation and amortization 77 11 88 Interest expense — 24 24 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 679 (62) 617 Income tax expense (benefit) 166 (15) 151 Earnings (loss) before equity in earnings of unconsolidated affiliates 513 (47) 466 Equity in earnings of unconsolidated affiliates 10 — 10 Net earnings (loss) $ 523 $ (47) $ 476 Assets $ 9,040 $ 1,149 $ 10,189 Goodwill 2,461 264 2,725 The activities in our segments include the following: • Title. This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title-related services including trust activities, trustee sales guarantees, and home warranty products. This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default. • F&G . This segment consists of operations of our fixed annuities and life insurance related businesses. This segment issues a broad portfolio of deferred annuities (fixed index and fixed rate annuities), immediate annuities and indexed universal life insurance. • Corporate and Other. This segment consists of the operations of the parent holding company, our real estate technology subsidiaries and our remaining real estate brokerage businesses. This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following supplemental cash flow information is provided with respect to certain cash payment and non-cash investing and financing activities. Six months ended June 30, 2020 2019 Cash paid for: Interest $ 23 $ 22 Income taxes 12 78 Deferred sales inducements $ 6 $ — Non-cash investing and financing activities: Equity financing associated with the acquisition of F&G $ 577 $ — Change in proceeds of sales of investments available for sale receivable in period (25) (6) Change in purchases of investments available for sale payable in period 70 (4) Change in treasury stock purchases payable in period — — Lease liabilities recognized in exchange for lease right-of-use assets 13 15 Remeasurement of lease liabilities 30 42 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenue Our revenue consists of: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Revenue Stream Income Statement Classification Segment Total Revenue Revenue from insurance contracts: (in millions) Direct title insurance premiums Direct title insurance premiums Title $ 575 $ 625 $ 1,121 $ 1,065 Agency title insurance premiums Agency title insurance premiums Title 784 754 1,516 1,306 Life insurance premiums, insurance and investment product fees, and other Escrow, title-related and other fees F&G 20 — 20 — Home warranty Escrow, title-related and other fees Title 46 46 89 87 Total revenue from insurance contracts 1,425 1,425 2,746 2,458 Revenue from contracts with customers: Escrow fees Escrow, title-related and other fees Title 259 237 480 402 Other title-related fees and income Escrow, title-related and other fees Title 168 165 327 301 ServiceLink, excluding title premiums, escrow fees, and subservicing fees Escrow, title-related and other fees Title 86 97 192 180 Real estate technology Escrow, title-related and other fees Corporate and other 24 26 51 51 Real estate brokerage Escrow, title-related and other fees Corporate and other 6 14 12 21 Other Escrow, title-related and other fees Corporate and other 42 12 — 33 Total revenue from contracts with customers 585 551 1,062 988 Other revenue: Loan subservicing revenue Escrow, title-related and other fees Title 96 68 177 124 Interest and investment income Interest and investment income Various 152 59 205 113 Realized gains and losses, net Realized gains and losses, net Various 162 41 (158) 183 Total revenues Total revenues $ 2,420 $ 2,144 4,032 3,866 Our Direct title insurance premiums are recognized as revenue at the time of closing of the underlying transaction as the earnings process is then considered complete. Regulation of title insurance rates varies by state. Premiums are charged to customers based on rates predetermined in coordination with each states' respective Department of Insurance. Cash associated with such revenue is typically collected at closing of the underlying real estate transaction. Premium revenues from agency title operations are recognized when the underlying title order and transaction closing, if applicable, are complete. Revenues from our home warranty business are generated from contracts with customers to provide warranty for major home appliances. Substantially all of our home warranty contracts are one year in length and revenue is recognized ratably over the term of the contract. Escrow fees and Other title-related fees and income in our Title segment are closely related to Direct title insurance premiums and are primarily associated with managing the closing of real estate transactions including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, providing notary and home inspection services, and other real estate or title-related activities. Revenue is primarily recognized upon closing of the underlying real estate transaction or completion of services. Cash associated with such revenue is typically collected at closing. Revenues from ServiceLink, excluding its title premiums, escrow fees and loan subservicing fees primarily include revenues from real estate appraisal services and foreclosure processing and facilitation services. Revenues from real estate appraisal services are recognized when all appraisal work is complete, a final report is issued to the client and the client is billed. Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete. Life insurance premiums in our F&G segment reflect premiums for traditional life insurance products which are recognized as revenue when due from the policyholder. We have ceded the majority of our traditional life business to unaffiliated third party reinsurers. While the base contract has been reinsured, we continue to retain the return of premium rider. Insurance and investment product fees and other consist primarily of the cost of insurance on IUL policies, unearned revenue ("UREV") on IUL policies, policy rider fees primarily on FIA policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts. Real estate technology revenues are primarily comprised of subscription fees for use of software provided to real estate professionals. Subscriptions are only offered on a month-by-month basis and fees are billed monthly. Revenue is recognized in the month services are provided. Real estate brokerage revenues are primarily comprised of commission revenues earned in association with the facilitation of real estate transactions and are recognized upon closing of the sale of the underlying real estate transaction. Loan subservicing revenues are generated by certain subsidiaries of ServiceLink and are associated with the servicing of mortgage loans on behalf of its customers. Revenue is recognized when the underlying work is performed and billed. Loan subservicing revenues are subject to the recognition requirements of ASC Topic 860. Interest and investment income consists primarily of interest payments received on fixed maturity security holdings and dividends received on equity and preferred security holdings. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, primarily related to revenue from our home warranty business, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Contract Balances The following table provides information about trade receivables and deferred revenue: June 30, 2020 December 31, 2019 (In millions) Trade receivables $ 312 $ 321 Deferred revenue (contract liabilities) 110 111 Deferred revenue is recorded primarily for our home warranty contracts. Revenues from home warranty products are recognized over the life of the policy, which is primarily one year. The unrecognized portion is recorded as deferred revenue in accounts payable and other accrued liabilities in the Condensed Consolidated Balance Sheets. During the three and six months ended June 30, 2020, we recognized $35 million and $77 million of revenue, respectively, which was included in deferred revenue at the beginning of the period. |
Intangibles
Intangibles | 1 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangibles | Intangibles A summary of the changes in the carrying amounts of the Company's VOBA, DAC and DSI intangible assets are as follows (in millions): VOBA DAC DSI Total Balance at Balance at December 31, 2019 $ — $ — $ — $ — F&G acquisition 1,890 — — 1,890 Deferrals — 28 6 34 Amortization (3) — — (3) Interest 3 — — 3 Unlocking — — — — Adjustment for net unrealized investment (gains) losses (101) (8) (2) (111) Balance at June 30, 2020 $ 1,789 $ 20 $ 4 $ 1,813 Amortization of VOBA, DAC, and DSI is based on the current and future expected gross margins or profits recognized, including investment gains and losses. The interest accrual rate utilized to calculate the accretion of interest on VOBA ranged from 0% to 4.66%. The adjustment for unrealized net investment losses (gains) represents the amount of VOBA, DAC, and DSI that would have been amortized if such unrealized gains and losses had been recognized. This is referred to as the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the unaudited Condensed Consolidated Statements of Operations. As of June 30, 2020, the VOBA balances included cumulative adjustments for net unrealized investment gains of $101 million, the DAC balances included cumulative adjustments for net unrealized investment gains of $8 million, and the DSI balance included net unrealized investment gains of $2 million. For the inforce liabilities as of June 30, 2020, the estimated amortization expense for VOBA in future fiscal periods is as follows (in millions): Estimated Amortization Expense Fiscal Year 2020 $ 95 2021 191 2022 230 2023 212 2024 194 Thereafter 968 The Company had an unearned revenue liability balance of $0 as of June 30, 2020, including deferrals of $(4) million, amortization of $0, interest of $0, unlocking of $0 and adjustment for net unrealized investment gains (losses) of $4 million. Definite and Indefinite Lived Other Intangible Assets Other intangible assets as of June 30, 2020 consist of the following (in millions): Cost Accumulated amortization Net carrying amount Weighted average useful life (years) Customer relationships and contracts $ 774 $ (576) $ 198 10 Computer software 384 (237) 147 2 to 10 Value of Distribution Asset (VODA) 185 (1) 184 15 Definite lived trademarks, tradenames, and other 73 (20) 53 10 Indefinite lived tradenames and other 40 N/A 40 Indefinite Total $ 622 | Other intangible assets as of June 30, 2020 consist of the following (in millions): Cost Accumulated amortization Net carrying amount Weighted average useful life (years) Customer relationships and contracts $ 774 $ (576) $ 198 10 Computer software 384 (237) 147 2 to 10 Value of Distribution Asset (VODA) 185 (1) 184 15 Definite lived trademarks, tradenames, and other 73 (20) 53 10 Indefinite lived tradenames and other 40 N/A 40 Indefinite Total $ 622 |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goo dwill as of December 31, 2019 and June 30, 2020 consists of the following: Title F&G Corporate and Other Total (In millions) Balance, December 31, 2019 $ 2,462 $ — $ 265 $ 2,727 Goodwill associated with the F&G acquisition — 1,725 — 1,725 Balance, June 30, 2020 $ 2,462 $ 1,725 $ 265 $ 4,452 |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued OperationsIn connection with the F&G acquisition, certain third party offshore reinsurance businesses acquired were deemed discontinued operations and are presented as such within our Condensed Consolidated Statements of Earnings for the three and six months ended June 30, 2020. While these businesses will not be part of our long term operations, we have not finalized the specific manner or timing of disposal, including any continuing involvement with these operations. |
F&G Reinsurance
F&G Reinsurance | 6 Months Ended |
Jun. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
F&G Reinsurance | F&G Reinsurance F&G reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding F&G's retention limit is reinsured. F&G primarily seeks reinsurance coverage in order to limit its exposure to mortality losses and enhance capital management. F&G follows reinsurance accounting when there is adequate risk transfer. Otherwise, the deposit method of accounting is followed. F&G also assumes policy risks from other insurance companies. The effect of reinsurance on net premiums earned and net benefits incurred (benefits incurred and reserve changes) for the one month ended June 30, 2020 were as follows (in millions): One Month Ended June 30, 2020 Net Premiums Earned Net Benefits Incurred Direct $ 17 $ 155 Assumed — — Ceded (12) — Net $ 5 $ 155 Amounts payable or recoverable for reinsurance on paid and unpaid claims are not subject to periodic or maximum limits. F&G did not write off any significant reinsurance balances during the one month ended. F&G did not commute any ceded reinsurance treaties during the one month ended June 30, 2020. Following the adoption of ASC 326, we estimate expected credit losses on reinsurance recoverables using a probability of default/loss given default model. Significant inputs to the model include the reinsurers credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features. As of the acquisition of F&G, due to purchase accounting adjustments, our expected credit loss reserve was valued at $0. During the one month ended June 30, 2020, the expected credit loss reserve was increased to $22 million. No policies issued by F&G have been reinsured with any foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance. F&G has not entered into any reinsurance agreements in which the reinsurer may unilaterally cancel any reinsurance for reasons other than non-payment of premiums or other similar credit issues. Effective January 1, 2017, FGL Insurance entered into an indemnity reinsurance agreement with Hannover Re, a third party reinsurer, to reinsure an inforce block of its FIA and fixed deferred annuity contracts with guaranteed minimum withdrawal benefits ("GMWB") and Guaranteed Minimum Death Benefit (“GMDB”) guarantees. In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB and GMDB guarantees. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk. Effective July 1, 2017, FGL Insurance extended this agreement to include new business issued during 2017. Effective January 1, 2018 FGL Insurance extended this agreement to include new business issued during 2018, and extended the recapture period from 8 to 12 years. Effective January 1, 2019, FGL Insurance extended this agreement to include new business issued during 2019. FGL Insurance incurred risk charge fees of $1.7 million during the one month ended June 30, 2020, in relation to this reinsurance agreement. Effective December 31, 2018, FGL Insurance entered into a reinsurance agreement with Kubera to cede approximately $758 million of certain MYGA and deferred annuity GAAP reserve on a coinsurance funds withheld basis, net of applicable existing reinsurance. In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of MYGA and deferred annuity policies for certain issue years to Kubera. Effective June 30, 2019, FGL Insurance and Kubera executed a letter of intent to amend this agreement and cede an additional $185 million of MYGA GAAP reserves on a coinsurance funds withheld basis via a quota share percentage of certain issue years. The amended reinsurance agreement was executed on July 31, 2019. Effective December 31, 2018, FGL Insurance entered into a reinsurance agreement with Kubera to cede approximately $4.0 billion of certain FIA statutory reserve on a coinsurance funds withheld basis, net of applicable existing reinsurance. In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of FIA policies for certain issue years to Kubera. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk. Effective June 30, 2019, FGL Insurance and Kubera executed a letter of intent to amend this agreement and cede an additional $1.0 billion of FIA statutory reserves on a coinsurance funds withheld basis via a quota share percentage of certain issue years. The amended reinsurance agreement was executed on July 31, 2019. The effects of the amendment are also not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP. Effective May 1, 2020, FGL Insurance entered into an indemnity reinsurance agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with guaranteed minimum withdrawal benefits ("GMWB"). In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk. Concentration of Reinsurance Risk F&G has a significant concentration of reinsurance risk with third party reinsurers, Wilton Reassurance Company (“Wilton Re”) and Kubera Insurance (SAC) Ltd. ("Kubera"), that could have a material impact on the Company’s financial position in the event that either Wilton Re or Kubera fail to perform their obligations under the various reinsurance treaties. Wilton Re is a wholly-owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"). CPPIB has an AAA issuer credit rating from Standard & Poor's Ratings Services ("S&P") as of June 30, 2020. Kubera is not rated, however, management has attempted to mitigate the risk of non-performance through the funds withheld arrangement. As of June 30, 2020, the net amount recoverable from Wilton Re was $1,478 million and the net amount recoverable from Kubera was $828 million. The Company monitors both the financial condition of individual reinsurers and risk concentration arising from similar activities and economic characteristics of reinsurers to attempt to reduce the risk of default by such reinsurers. The Company believes that all amounts due from Wilton Re and Kubera for periodic treaty settlements are collectible as of June 30, 2020. |
F&G Insurance Subsidiary Financ
F&G Insurance Subsidiary Financial Information and Regulatory Matters | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
F&G Insurance Subsidiary Financial Information and Regulatory Matters | Summary of Reserve for Title Claim Losses A summary of the reserve for title claim losses follows: Six months ended June 30, 2020 2019 (Dollars in millions) Beginning balance $ 1,509 $ 1,488 Change in reinsurance recoverable (1) — Claim loss provision related to: Current year 119 107 Prior years — — Total title claim loss provision 119 107 Claims paid, net of recoupments related to: Current year (2) (2) Prior years (97) (113) Total title claims paid, net of recoupments (99) (115) Ending balance of claim loss reserve for title insurance $ 1,528 $ 1,480 Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 4.5 % Several lawsuits have been filed by various parties against Chicago Title Company and Chicago Title Insurance Company as its alter ego (collectively, the “Named Companies”), among others. Generally, plaintiffs claim they are investors who were solicited by Gina Champion-Cain to provide funds that purportedly were to be used for high-interest, short-term loans to parties seeking to acquire California alcoholic beverage licenses. Plaintiffs contend that under California state law, alcoholic beverage license applicants are required to escrow an amount equal to the license purchase price while their applications remain pending with the State. It is further alleged that Chicago Title Company participated with Ms. Champion-Cain and her entities in a fraud scheme involving an escrow account maintained by Chicago Title Company into which the plaintiffs’ funds were deposited. The lawsuits are as follows: On October 22, 2019, a lawsuit styled, Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co., Chicago Title Co., was filed in the United States District Court for the Southern District of California. Plaintiffs claim losses of more than $75 million as a result of the alleged fraud scheme, and also seek consequential, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case. On November 5, 2019, a putative class action lawsuit styled, Blake E. Allred and Melissa M. Allred v. Chicago Title Co., Chicago Title Ins. Co., Adelle E. Ducharme, Betty Elixman, Gina Champion-Cain, Joelle Hanson, Cris Torres, and Rachel Bond, was filed in the United States District Court for the Southern District of California. Plaintiffs seek class certification and consequential, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case. On December 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, and ABC Funding Strategies, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses of more than $250 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On March 6, 2020, a lawsuit styled, Wakefield Capital, LLC, Wakefield Investments, LLC, 2Budz Holding, LLC, Doug and Kristine Heidrich, and Jeff and Heidi Orr v. Chicago Title Co. and Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $7.0 million as a result of the alleged fraud scheme, and also seek punitive damages, recovery of attorneys’ fees, and disgorgement. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On March 16, 2020, a lawsuit styled, Randolph L. Levin, et al., v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, Betty Elixman, et al., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $38 million as a result of the alleged fraud scheme, and also seek punitive damages and the recovery of attorneys’ fees. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds. On May 29, 2020, a lawsuit styled, Mark Atherton, et al., v. Chicago Title Co. and Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses of more than $30 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages, as well as the recovery of attorneys’ fees. The Named Companies are investigating and will file a response on or before the due date. On June 29, 2020, a lawsuit styled, Susan Heller Fenley Separate Property Trust, DTD 03/04/2010, Susan Heller Fenley Inherited Roth IRA, Shelley Lynn Tarditi Trust and ROJ, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $6 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are investigating and will file a response on or before the due date. On June 29, 2020, a lawsuit styled, Yuan Yu and Polly Yu v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $1 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are investigating and will file a response on or before the due date. On July 7, 2020, a cross-claim styled, Laurie Peterson v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in an existing lawsuit styled, Banc of California, National Association v. Laurie Peterson, which is pending in Superior Court of San Diego County for the State of California. Cross-complaint plaintiff was sued by a bank to recover more than $35 million that she allegedly guaranteed to repay based upon a loan to one of the investors, which is purportedly in default as a result of the alleged fraud scheme. Cross-complaint plaintiff has, in turn, sued the Named Companies in that action for monetary losses as well as exemplary damages and attorneys’ fees. The Named Companies are investigating and will file a response on or before the due date. In addition, the Chicago Title Company recently resolved a claim from another group of alleged investors under confidential terms during a pre-suit mediation. At this time, the Company is unable to ascertain its liability, if any, and is unable to make an estimate of a reasonably possible claim loss for any of these claims due to the complex nature of the claims and litigation, the early procedural status of each claim (involving unresolved questions of fact without any rulings on the merits or determinations of liability), the extent of discovery not yet conducted, potential insurance coverage, and an incomplete evaluation of possible defenses, counterclaims, crossclaims or third-party claims that may exist. Moreover, it is likely that in some instances, the claims listed above are duplicative. The Company, however, has recorded an incurred claim loss reserve for legal fees related to these matters as of June 30, 2020, which is included in its consolidated reserve for claim losses. As further information becomes available, the Company will continue to evaluate the adequacy of its consolidated reserve for claim losses. We continually upda te loss reserve estimates as new information becomes known, new loss patterns emerge or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors. Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate. Our U.S. insurance subsidiaries, FGL Insurance, Fidelity & Guaranty Life Insurance Company of New York ("FGL NY Insurance"), and Raven Re, file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners (“NAIC”) that are prepared in accordance with Statutory Accounting Principles (“SAP”) prescribed or permitted by such authorities, which may vary materially from GAAP. Prescribed SAP includes the Accounting Practices and Procedures Manual of the NAIC as well as state laws, regulations and administrative rules. Permitted SAP encompasses all accounting practices not so prescribed. The principal differences between SAP financial statements and financial statements prepared in accordance with GAAP are that SAP financial statements do not reflect DAC, DSI and VOBA, some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contractholder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted. Accordingly, SAP operating results and SAP capital and surplus may differ substantially from amounts reported in the GAAP basis financial statements for comparable items. FSRC (Cayman), F&G Re (Bermuda), and F&G Life Re (Bermuda) file financial statements with their respective regulators that are based on U.S. GAAP. FGL Insurance applies Iowa-prescribed accounting practices that permit Iowa-domiciled insurers to report equity call options used to economically hedge FIA index credits at amortized cost for statutory accounting purposes and to calculate FIA statutory reserves such that index credit returns will be included in the reserve only after crediting to the annuity contract. This resulted in a $57 million decrease to statutory capital and surplus at June 30, 2020. FGL Insurance’s statutory carrying value of Raven Re reflects the effect of permitted practices Raven Re received to treat the available amount of a letter of credit as an admitted asset which increased Raven Re’s statutory capital and surplus by $100 million at June 30, 2020. Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL Insurance which increased Raven Re’s statutory capital and surplus by $4 million at June 30, 2020. Without such permitted statutory accounting practices Raven Re’s statutory capital and surplus (deficit) would be $(11) million as of June 30, 2020, and its risk-based capital would fall below the minimum regulatory requirements. The letter of credit facility is collateralized by NAIC 1 rated debt securities. If the permitted practice was revoked, the letter of credit could be replaced by the collateral assets with Nomura’s consent. FGL Insurance’s statutory carrying value of Raven Re at June 30, 2020 was $93 million. As of June 30, 2020, FGL NY Insurance did not follow any prescribed or permitted statutory accounting practices that differ from the NAIC's statutory accounting practices. |
Basis of Financial Statements (
Basis of Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Financial Statements | The financial information in this report presented for interim periods is unaudited and includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” the "Company" or “FNF”) prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, 2019. |
Earnings Per Share | Earnings Per Share Basic earnings per share, as presented on the Condensed Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders in a given period by the weighted average number of common shares outstanding during such period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock, convertible debt instruments and certain other convertible share based payments which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted Pronouncements In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of fixed maturity securities available for sale. The method used to measure estimated credit losses for fixed maturity available-for-sale securities will be unchanged from current GAAP; however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those securities. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting period beginning after December 15, 2019 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable Generally Accepted Accounting Principles. We adopted this standard using the prospective transition approach for debt securities for which other than temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of ASC 326. The effective interest rate on these debt securities was not changed. Amounts previously recognized in accumulated other comprehensive income as of January 1, 2020 relating to improvements in cash flows expected to be collected will be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received. See Note E Investments for further discussion of the adoption as it relates to our fixed maturity securities available for sale. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We have adopted this standard as of January 1, 2020 and are applying this guidance on a prospective basis. The overall effect of Topic 350 had no impact to the Condensed Consolidated Financial Statements upon adoption. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. The new guidance introduces the following requirements: for investments in certain entities that calculate net asset value, investors are required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption might lapse if the investee has communicated timing to the entity or announced timing publicly; entities should use the measurement uncertainty disclosure to communicate information about the uncertainty in measurement as of the reporting date; entities must disclose changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, or other quantitative information in lieu of weighted average if the entity determines such information would be more reasonable and rational; and entities are no longer required to disclose the amounts and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and the overall effect of Topic 820 on our unaudited Condensed Consolidated Financial Statements was not material upon adoption. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Under this update, entities must consider indirect interests held through related parties under common control on a proportional basis to determine whether a decision-making fee is a variable interest. We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and it did not have an impact on our unaudited Condensed Consolidated Financial Statements. Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We do not expect this guidance to have a material impact on our Consolidated Financial Statements and related disclosures upon adoption. In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts, effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. In June of 2020, the FASB voted to propose a one-year deferral of the effective date of ASU 2018-12 in response to implementation challenges resulting from COVID-19. This update introduced the following requirements: assumptions used to measure cash flows for traditional and limited-payment contracts must be reviewed at least annually with the effect of changes in those assumptions being recognized in the statement of operations; the discount rate applied to measure the liability for future policy benefits and limited-payment contracts must be updated at each reporting date with the effect of changes in the rate being recognized in other comprehensive income; market risk benefits associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value attributable to a change in the instrument-specific credit risk being recognized in other comprehensive income; deferred acquisition costs are required to be amortized in proportion to premiums, gross profits, or gross margins and those balances must be amortized on a constant level basis over the expected term of the related contracts; deferred acquisition costs must be written off for unexpected contract terminations; an disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions, and methods used in measurement are required to be disclosed. The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements. We do not currently expect to early adopt this standard. We have identified specific areas that will be impacted by the new guidance and are in the process of assessing the accounting, reporting and/or process changes that will be required to comply as well as the impact of the new guidance on our consolidated financial statements. |
Principles of Consolidation - VIEs | Principles of Consolidation - VIEs We are involved in certain entities that are considered variable interest entities ("VIEs") as defined under U.S. GAAP. Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes. A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support or where investors lack certain characteristics of a controlling financial interest. We assess our relationships to determine if we have the ability to direct the activities, or otherwise exert control, to evaluate if we are the primary beneficiary of the VIE. If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in our unaudited consolidated financial statements. See Note E Investments for additional information on our investments in VIEs. |
Revenue Recognition | Revenue Recognition - Life Insurance and Annuity Premiums Our insurance premiums for traditional life insurance products are recognized as revenue when due from the contractholder, net of premiums ceded under reinsurance, and are included within Escrow, title-related, and other fees in the Condensed Consolidated Statements of Earnings. Our traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of term life insurance and certain annuities with life contingencies. Premium collections for FIA and fixed rate annuities, IUL policies and immediate annuities without life contingency are reported as an increase to deposit liabilities (i.e., contractholder funds) instead of as revenues. Similarly, cash payments to policyholders are reported as decreases in the liability for contractholder funds and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender and other charges deducted from contractholder funds, and net realized gains (losses) on investments. Surrender charges are earned when a policyholder withdraws funds from the contract early or cancels the contract. Revenue Recognition - Interest and investment income Dividends and interest income are recorded in Interest and investment income and recognized when earned. Income or losses upon call or prepayment of available-for-sale fixed maturity securities are recognized in Interest and investment income. Amortization of premiums and accretion of discounts on investments in fixed maturity securities are reflected in Interest and investment income over the contractual terms of the investments, and for callable investments at a premium, based on the earliest call date of the investments, in a manner that produces a constant effective yield. For mortgage-backed and asset-backed securities, included in the fixed maturity available-for-sale (“AFS”) securities portfolios, we recognize income using a constant effective yield based on anticipated cash flows and the estimated economic life of the securities. When actual prepayments differ significantly from originally anticipated prepayments, the effective yield is generally recalculated prospectively to reflect actual payments to date plus anticipated future payments. Any adjustments resulting from changes in effective yield are reflected in Interest and investment income. For details on interest and investment income recognition on investments in unconsolidated affiliates and mortgage loans, refer to the respective subsections below. Interest and investment income is presented net of earned investment management fees. Insurance and Investment Product Fees and Other Product fee revenue from indexed universal life ("IUL") products and annuities is comprised of policy and contract fees charged for the cost of insurance, policy administration and rider fees. Fees are assessed on a monthly basis and recognized as revenue when earned. Product fee revenue also includes surrender charges which are collected and recognized as revenue when the policy is surrendered. Some of the product fee revenue is not level by policy year. The unearned portion of the revenues are deferred and brought into income relative to the gross profits of the business. Insurance and investment product fees and other are included within Escrow, title-related, and other fees in the Condensed Consolidated Statements of Earnings, and unearned revenue liability is included within Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. Benefits and Other Changes in Policy Reserves Benefit expenses for FIA, fixed rate annuities and IUL policies include index credits and interest credited to contractholder account balances and benefit claims in excess of contract account balances, net of reinsurance recoveries, are charged to expense in the period that they are earned by the policyholder based on their selected strategy. Interest crediting rates associated with funds invested in the general account of our insurance subsidiaries range from 0.5% to 6.0% for deferred annuities and FIAs combined, and 3.0% to 4.8% for IULs. Other changes in policy reserves include the change in the fair value of the FIA embedded derivative and the change in the reserve for secondary guarantee benefit payments. Other changes in policy reserves also include the change in reserves for life insurance products. For traditional life and immediate annuities, policy benefit claims are charged to expense in the period that the claims are incurred, net of reinsurance recoveries. |
Investment Securities | Investment Securities Our investments in fixed maturity securities have been designated as AFS and are carried at fair value with unrealized gains and losses included in Accumulated other comprehensive income (“AOCI”), net of associated intangible asset and unearned revenue ("UREV") “shadow adjustments” (discussed in Note M Intangibles ), SOP 03-1 reserves and deferred income taxes. Our investments in equity securities and preferred securities are carried at fair value with unrealized gains and losses included in Realized gains and losses, net. Mortgage Loans Our investment in mortgage loans consists of commercial and residential mortgage loans on real estate, which are reported at amortized cost, less allowance for losses. For details on our policy around allowance for expected credit loss on mortgage loans, refer to Note E Investments . Commercial mortgage loans are continuously monitored by reviewing appraisals, operating statements, rent revenues, annual inspection reports, loan specific credit quality, property characteristics, market trends and other factors. Commercial mortgage loans are rated for the purpose of quantifying the level of risk. Loans are placed on a watch list when the debt service coverage ("DSC") ratio falls below and the loan-to-value ("LTV") ratios exceeds certain thresholds. Loans on the watchlist are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or interest. We define delinquent mortgage loans as 30 days past due, consistent with industry practice. Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define nonperforming residential mortgage loans as those that are 90 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss. Interest on loans is recognized on an accrual basis at the applicable interest rate on the principal amount outstanding. Loan origination fees and direct costs, as well as premiums and discounts, are amortized as level yield adjustments over the respective loan terms. Unamortized net fees or costs are recognized upon early repayment of the loans. Loan commitment fees are deferred and amortized on an effective yield basis over the term of the loan. |
Derivatives Financial Instruments | Derivative Financial Instruments We hedge certain portions of our exposure to product related equity market risk by entering into derivative transactions (primarily call options). All such derivative instruments are recognized as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value. The changes in fair value are reported within Realized gains and losses, net in the accompanying Condensed Consolidated Statements of Earnings. We purchase financial instruments and issue products that may contain embedded derivative instruments. If it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract for measurement purposes. The embedded derivative is carried at fair value, which is determined through a combination of market observable inputs such as market value of option and interest swap rates and unobservable inputs such as the mortality multiplier, surrender and withdrawal rates and non-performance spread. The changes in fair value are reported within Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Earnings. See a description of the fair value methodology used in Note D Fair Value of Financial Instruments |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates We account for our investments in unconsolidated affiliates using the equity method and use net asset value ("NAV") as a practical expedient to determine the carrying value. Income from investments in unconsolidated affiliates is included within Interest and investment income in the accompanying Condensed Consolidated Statements of Earnings. Recognition of income is delayed due to the availability of the related financial statements, which are obtained from the affiliate’s general partner generally on a one to three-month delay. Management meets quarterly with the general partner to determine whether any credit or other market events have occurred since prior quarter financial statements to ensure any material events are properly included in current quarter valuation and investment income. In addition, the impact of audit adjustments related to completion of calendar-year financial statement audits of the unconsolidated affiliates are typically received during the second quarter of each calendar year. Accordingly, our investment income from our investments in unconsolidated affiliates for any calendar-year period may not include the complete impact of the change in the underlying net assets for the unconsolidated affiliate for that calendar-year period. |
Intangible Assets | Intangible Assets Our intangible assets include an intangible asset reflecting the value of insurance and reinsurance contracts acquired (hereafter referred to as the value of business acquired (“VOBA”), the value of distribution network acquired ("VODA"), deferred acquisition costs (“DAC”), deferred sales inducements (“DSI”), internally developed software, trademarks and state licenses. VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts in a life insurance company acquisition. It represents the portion of the purchase price allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date. VODA is an intangible asset that represents the value of an existing distribution network. DAC consists principally of commissions that are related directly to the successful sale of new or renewal insurance contracts, which may be deferred to the extent recoverable. Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred. DSI represents up front bonus credits and vesting bonuses to policyholder account values which may be deferred to the extent recoverable. The methodology for determining the amortization of DAC, DSI and VOBA varies by product type. For all insurance contracts accounted for under long-duration contract deposit accounting, amortization is based on assumptions consistent with those used in the development of the underlying contract liabilities adjusted for emerging experience and expected trends. Internally developed software and trade name intangible assets are amortized on a straight-line basis over their deemed useful lives while VODA is amortized using the sum of years digits method. For all of the insurance intangibles (DAC, DSI and VOBA), the balances are generally amortized over the lives of the policies in relation to the expected emergence of estimated gross profits (“EGPs”) from investment income, surrender charges and other product fees, less policy benefits, maintenance expenses, mortality net of reinsurance ceded, and expense margins. Recognized gains (losses) on investments and changes in fair value of the funds withheld coinsurance embedded derivative are included in actual gross profits in the period realized as described further below. Amortization is reported within Depreciation and amortization in the accompanying Condensed Consolidated Statements of Earnings. Changes in assumptions, including our earned rate (i.e., long term assumptions of the Company’s expected earnings on related investments), budgeted option costs (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature) and surrender rates can have a significant impact on VOBA, DAC and DSI balances and amortization rates. Due to the relative size and sensitivity to minor changes in underlying assumptions of those intangible balances, we perform quarterly and annual analysis of the VOBA, DAC and DSI balances for recoverability to ensure that the unamortized portion does not exceed the expected recoverable amounts. At each evaluation date, actual historical gross profits are reflected with the impact on the intangibles reported as “unlocking” as a component of amortization expense, and estimated future gross profits and related assumptions are evaluated for continued reasonableness. Any adjustment in estimated future gross profits requires that the amortization rate be revised (“unlocking”) retroactively to the date of the policy or contract issuance. The cumulative unlocking adjustment is recognized as a component of current period amortization. |
Reinsurance | ReinsuranceOur insurance subsidiaries enter into reinsurance agreements with other companies in the normal course of business. Reinsurance agreements are reported on a gross basis in our Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other liabilities for amounts, such as premiums, owed to the reinsurers. Premiums and benefits are reported net of insurance ceded. The effects of certain reinsurance agreements are not accounted for as reinsurance as they do not satisfy the risk transfer requirements for GAAP. The assets and liabilities of certain reinsurance contracts are presented on a net basis in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations, respectively, when there is a right of offset explicit in the reinsurance agreement and deposit accounting is being applied. |
Contractholder Funds | Contractholder Funds The liabilities for contractholder funds for deferred annuities and IUL policies consist of contract account balances that accrue to the benefit of the contractholders. The liabilities for FIA policies consist of the value of the host contract plus the fair value of the embedded derivative. The embedded derivative is carried at fair value in Contractholder funds in the accompanying Condensed Consolidated Balance Sheets with changes in fair value reported in Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Earnings, and changes in fair value resulting from unrealized gain/loss reported within Accumulated other comprehensive earnings in the accompanying Condensed Consolidated Balance Sheets. See a description of the fair value methodology used in Note D Fair Value of Financial Instruments . Liabilities for immediate annuities with life contingencies are recorded at the present value of future benefits. Liabilities for the secondary guarantees on UL-type products or Investment-type contracts are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest. The benefit ratio is the ratio of the present value of future secondary guarantees to the present value of the assessments used to provide the secondary guarantees using the same assumptions as we use for our intangible assets. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes in a manner similar to the unlocking of DAC, DSI and VOBA. The accounting for secondary guarantee benefits impact EGPs used to calculate amortization of DAC, DSI and VOBA. The SOP 03-1 reserve is adjusted for the impact of unrealized gains (losses) on AFS investments as if these gains (losses) had been realized, with corresponding credits or charges included in AOCI. Future Policy Benefits The liabilities for future policy benefits and claim reserves for traditional life policies and life contingent pay-out annuity policies are computed using assumptions for investment yields, mortality and withdrawals based on generally accepted actuarial methods and assumptions at the time of contract issue. Investment yield assumption for traditional direct life reserves for all contracts is 6.0%. The investment yield assumption for life contingent pay-out annuities is 2.5%. Policies are terminated through surrenders and maturities, where surrenders represent the voluntary terminations of policies by policyholders and maturities are determined by policy contract terms. Surrender assumptions are based upon cedant experience adjusted for expected future conditions. Federal Home Loan Bank of Atlanta Agreements Contractholder funds include funds related to funding agreements that have been issued by the Company to the Federal Home Loan Bank of Atlanta (“FHLB”) as a funding medium for single premium funding agreements. The funding agreements (i.e., immediate annuity contracts without life contingencies) provide a guaranteed stream of payments or provide for a bullet payment with renewal provisions. Single premiums were received at the initiation of the funding agreements and were in the form of advances from the FHLB. Payments under the funding agreements extend through 2022. The reserves for the funding agreements are included in |
Revenue Recognition, Other | Interest and investment income consists primarily of interest payments received on fixed maturity security holdings and dividends received on equity and preferred security holdings. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, primarily related to revenue from our home warranty business, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Revenue Recognition, Services, Real Estate Transactions | Escrow fees and Other title-related fees and income in our Title segment are closely related to Direct title insurance premiums and are primarily associated with managing the closing of real estate transactions including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, providing notary and home inspection services, and other real estate or title-related activities. Revenue is primarily recognized upon closing of the underlying real estate transaction or completion of services. Cash associated with such revenue is typically collected at closing. Revenues from ServiceLink, excluding its title premiums, escrow fees and loan subservicing fees primarily include revenues from real estate appraisal services and foreclosure processing and facilitation services. Revenues from real estate appraisal services are recognized when all appraisal work is complete, a final report is issued to the client and the client is billed. Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete. Life insurance premiums in our F&G segment reflect premiums for traditional life insurance products which are recognized as revenue when due from the policyholder. We have ceded the majority of our traditional life business to unaffiliated third party reinsurers. While the base contract has been reinsured, we continue to retain the return of premium rider. Insurance and investment product fees and other consist primarily of the cost of insurance on IUL policies, unearned revenue ("UREV") on IUL policies, policy rider fees primarily on FIA policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts. Real estate technology revenues are primarily comprised of subscription fees for use of software provided to real estate professionals. Subscriptions are only offered on a month-by-month basis and fees are billed monthly. Revenue is recognized in the month services are provided. Real estate brokerage revenues are primarily comprised of commission revenues earned in association with the facilitation of real estate transactions and are recognized upon closing of the sale of the underlying real estate transaction. Loan subservicing revenues are generated by certain subsidiaries of ServiceLink and are associated with the servicing of mortgage loans on behalf of its customers. Revenue is recognized when the underlying work is performed and billed. Loan subservicing revenues are subject to the recognition requirements of ASC Topic 860. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Initial Purchase Price | The initial purchase price is as follows (in millions): Cash paid for outstanding F&G shares $ 1,803 Less: Cash Acquired 827 Net cash paid for F&G 976 Value of FNF share consideration 772 Value of outstanding converted equity awards attributed to services already rendered 28 Liability accrued to former owners of F&G common shares 132 Total net consideration paid $ 1,908 |
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair value amounts recognized for the assets acquired and liabilities assumed as of the acquisition date (dollars in millions): Fair Value Fixed maturity securities $ 22,389 Preferred securities 876 Equity securities 52 Derivative instruments 313 Mortgage loans 1,754 Investments in unconsolidated affiliates 1,019 Other long-term investments 430 Short-term investments 37 Trade and notes receivable 1 Reinsurance recoverable 3,241 Goodwill 1,725 Prepaid expenses and other assets 352 Lease assets 8 Other intangible assets 2,139 Assets of discontinued operations 2,392 Total assets acquired 36,728 Contractholder funds 26,454 Future policy benefits 4,106 Accounts payable and accrued liabilities 858 Notes payable 589 Funds withheld for reinsurance liabilities 816 Lease liabilities 9 Income taxes payable (26) Deferred tax liability (254) Liabilities of discontinued operations 2,268 Total liabilities assumed 34,820 Net assets acquired $ 1,908 |
Gross Carrying Value and Weighted Average Useful Lives of Property and Equipment and Other Intangible Assets Acquired | The gross carrying value and weighted average estimated useful lives of Other intangible assets acquired in the F&G acquisition consist of the following (dollars in millions): Gross Carrying Value Weighted Average Other intangible assets: Value of business acquired $ 1,890 Various Value of distribution network acquired 185 15 Trademarks and licenses 43 10 Software 21 2 Total Other intangible assets 2,139 |
Unaudited Pro Forma Results | For comparative purposes, selected unaudited pro-forma consolidated results of operations of FNF for the three and six-month periods ending June 30, 2020 and 2019 are presented below. Pro-forma results presented assume the consolidation of F&G occurred as of the beginning of the respective 2019 periods. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Total revenues $ 2,770 $ 2,596 $ 4,151 $ 4,848 Net earnings attributable to FNF common shareholders 306 271 54 581 |
Summary of Reserve for Title _2
Summary of Reserve for Title Claim Losses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Summary of the Reserve for Claim Losses | A summary of the reserve for title claim losses follows: Six months ended June 30, 2020 2019 (Dollars in millions) Beginning balance $ 1,509 $ 1,488 Change in reinsurance recoverable (1) — Claim loss provision related to: Current year 119 107 Prior years — — Total title claim loss provision 119 107 Claims paid, net of recoupments related to: Current year (2) (2) Prior years (97) (113) Total title claims paid, net of recoupments (99) (115) Ending balance of claim loss reserve for title insurance $ 1,528 $ 1,480 Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 4.5 % |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Carrying at Fair Value on Recurring Basis | The carrying amounts and estimated fair values of our financial instruments for which the disclosure of fair values is required, including financial assets and liabilities measured and carried at fair value on a recurring basis, with the exception of investment contracts, portions of other long-term investments and debt which are disclosed later within this footnote, was summarized according to the hierarchy previously described, as follows (in millions): June 30, 2020 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 2,353 $ — $ — $ 2,353 $ 2,353 Fixed maturity securities, available-for-sale: Asset-backed securities — 4,594 1,016 5,610 5,610 Commercial mortgage-backed securities — 2,556 26 2,582 2,582 Corporates — 11,750 1,264 13,014 13,014 Hybrids 286 713 4 1,003 1,003 Municipals — 1,428 40 1,468 1,468 Residential mortgage-backed securities — 418 509 927 927 U.S. Government — 311 — 311 311 Foreign Governments — 183 16 199 199 Equity securities 702 — 1 703 703 Preferred securities 502 701 — 1,203 1,203 Derivative investments 1 332 — 333 333 Short term investments 209 — — 209 209 Other long-term investments — — 44 44 44 Total financial assets at fair value $ 4,053 $ 22,986 $ 2,920 $ 29,959 $ 29,959 Liabilities Fair value of future policy benefits — — 5 5 5 Derivatives: FIA embedded derivatives, included in contractholder funds — — 2,952 2,952 2,952 Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities — 35 — 35 35 Total financial liabilities at fair value $ — $ 35 $ 2,957 $ 2,992 $ 2,992 December 31, 2019 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 1,376 $ — $ — $ 1,376 $ 1,376 Fixed maturity securities, available-for-sale: Commercial mortgage-backed securities — 22 — 22 22 Corporates — 1,540 17 1,557 1,557 Hybrids — 30 — 30 30 Municipals — 93 — 93 93 Residential mortgage-backed securities — 40 — 40 40 U.S. Government — 288 — 288 288 Foreign Governments — 60 — 60 60 Preferred securities 65 258 — 323 323 Equity securities 810 — 1 811 811 Short term investments 876 — — 876 876 Other long-term investments — — 120 120 120 Total financial assets at fair value $ 3,127 $ 2,331 $ 138 $ 5,596 $ 5,596 The following tables provide the carrying value and estimated fair value of our financial instruments that are carried on the unaudited Condensed Consolidated Balance Sheets at amounts other than fair value, summarized according to the fair value hierarchy previously described. June 30, 2020 (in millions) Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount Assets Commercial mortgage loans — — 583 583 574 Residential mortgage loans — — 1,177 1,177 1,175 Policy loans — — 26 26 30 Total $ — $ — $ 1,786 $ 1,786 $ 1,779 Liabilities Investment contracts, included in contractholder funds — — 20,666 20,666 23,683 Debt — 2,596 — 2,596 2,430 Total $ — $ 2,596 $ 20,666 $ 23,262 $ 26,113 |
Schedule of Unobservable Inputs Used for Level Three Fair Value Measurements of Financial Instruments on Recurring Basis | Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of June 30, 2020 are as follows: Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average) June 30, 2020 (in millions) June 30, 2020 Assets Asset-backed securities $ 763 Broker-quoted Offered quotes 98.66% - 122.19% (104.48)% Asset-backed securities 253 Third-Party Valuation Offered quotes 0.00% - 112.65% (83.58)% Commercial mortgage-backed securities 26 Broker-quoted Offered quotes 89.90% - 126.22% (125.18)% Corporates 317 Broker-quoted Offered quotes 13.70% - 111.18% (102.46)% Corporates 947 Third-Party Valuation Offered quotes 84.04% - 124.53% (105.51)% Hybrids 4 Third-Party Valuation Offered quotes 109.54% - 109.54% (109.54)% Municipals 40 Third-Party Valuation Offered quotes 122.62% - 122.62% (122.62)% Residential mortgage-backed securities 509 Broker-quoted Offered quotes 0.00% - 106.86% (106.86)% Foreign governments 16 Third-Party Valuation Offered quotes 98.72% - 99.90% (99.53)% Equity securities 1 Income-Approach Yield 2.61% Other long-term assets: Available-for-sale embedded derivative 21 Black Scholes model Market value of fund 100.00% Credit Linked Note 23 Broker-quoted Offered quotes 100.00% Total financial assets at fair value $ 2,920 Liabilities Future policy benefits 5 Discounted cash flow Non-performance spread 0.00% Risk margin to reflect uncertainty 0.00% - 0.50% (0.50)% Derivatives: FIA embedded derivatives, included in contractholder funds 2,952 Discounted cash flow Market value of option 0.00% - 40.32% (2.22)% Treasury rates 0.13% - 1.41% (0.77)% Mortality multiplier 80.00% - 80.00% (80.00)% Surrender rates 0.50% - 75.00% (5.72)% Partial withdrawals 2.00% - 3.50% (2.55)% Non-performance spread 1.19% - 1.19% (1.19)% Option cost 0.05% - 16.61% (2.19)% Total financial liabilities at fair value $ 2,957 |
Changes in Fair Value of Financial Instruments - Assets | The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and six months ended June 30, 2020 and 2019, respectively. F&G related activit y for the three and six months ended June 30, 2020 in the tables below is comprised of the one-month period ended June 30, 2020 only. This summary excludes any impact of amortization of VOBA, DAC and DSI. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. Three months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 14 1,238 — 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Total assets at Level 3 fair value $ 15 $ 2,754 $ — $ 22 $ 92 $ — $ (23) $ 60 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — (a) The net transfers out of Level 3 during the three months ended June 30, 2020 were exclusively to Level 2. Six months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 17 1,238 (3) 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Other long-term investment 120 — (61) — — — — (59) — — Total assets at Level 3 fair value $ 138 $ 2,754 $ (64) $ 22 $ 92 $ — $ (23) $ 1 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — ( a) The net transfers out of Level 3 during the six months ended June 30, 2020 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1. Three months ended June 30, 2019 (in millions) Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 18 — — — — — (2) 16 Other invested assets: Other long-term investment 107 5 — — — — — 112 Total assets at Level 3 fair value $ 125 $ 5 $ — $ — $ — $ — $ (2) $ 128 Six months ended June 30, 2019 Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 17 1 (1) 5 (1) — (5) 16 Other invested assets: Other long-term investment 101 11 — — — — — 112 Total assets at Level 3 fair value $ 118 $ 12 $ (1) $ 5 $ (1) $ — $ (5) $ 128 |
Changes in Fair Value of Financial Instruments - Liabilities | The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and six months ended June 30, 2020 and 2019, respectively. F&G related activit y for the three and six months ended June 30, 2020 in the tables below is comprised of the one-month period ended June 30, 2020 only. This summary excludes any impact of amortization of VOBA, DAC and DSI. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. Three months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 14 1,238 — 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Total assets at Level 3 fair value $ 15 $ 2,754 $ — $ 22 $ 92 $ — $ (23) $ 60 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — (a) The net transfers out of Level 3 during the three months ended June 30, 2020 were exclusively to Level 2. Six months ended June 30, 2020 (in millions) Balance at Beginning F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Change in Unrealized Incl in OCI Included in Included in Assets Fixed maturity securities available-for-sale: Asset-backed securities $ — $ 854 $ — $ 9 $ 91 $ — $ (5) $ 67 $ 1,016 $ 9 Commercial mortgage-backed securities — 26 — — — — — — 26 — Corporates 17 1,238 (3) 26 — — (14) — 1,264 26 Hybrids — 4 — — — — — — 4 — Municipals — 38 — 2 — — — — 40 3 Residential mortgage-backed securities — 534 — (15) 1 — (4) (7) 509 (13) Foreign Governments — 16 — — — — — — 16 — Equity securities 1 1 (1) — — — — — 1 — Other long-term assets: Available-for-sale embedded derivative — 20 1 — — — — — 21 — Credit linked note — 23 — — — — — — 23 — Other long-term investment 120 — (61) — — — — (59) — — Total assets at Level 3 fair value $ 138 $ 2,754 $ (64) $ 22 $ 92 $ — $ (23) $ 1 $ 2,920 $ 25 Liabilities Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ — FIA embedded derivatives, included in contractholder funds — 2,852 100 — — — — — 2,952 — Total liabilities at Level 3 fair value $ — $ 2,857 $ 100 $ — $ — $ — $ — $ — $ 2,957 $ — ( a) The net transfers out of Level 3 during the six months ended June 30, 2020 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1. Three months ended June 30, 2019 (in millions) Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 18 — — — — — (2) 16 Other invested assets: Other long-term investment 107 5 — — — — — 112 Total assets at Level 3 fair value $ 125 $ 5 $ — $ — $ — $ — $ (2) $ 128 Six months ended June 30, 2019 Balance at Beginning Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Balance at End of Included in Included in Assets Fixed maturity securities available-for-sale: Corporates 17 1 (1) 5 (1) — (5) 16 Other invested assets: Other long-term investment 101 11 — — — — — 112 Total assets at Level 3 fair value $ 118 $ 12 $ (1) $ 5 $ (1) $ — $ (5) $ 128 |
Schedule of Net Asset Value | The following table includes assets that have not been classified in the fair value hierarchy as the fair value of these investments are measured using the net asset value ("NAV") per share practical expedient. Carrying Value After Measurement (in millions) June 30, 2020 Investments in unconsolidated affiliates 1,191 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Consolidated Investments | The Company’s consolidated investments at June 30, 2020 and December 31, 2019 are summarized as follows (in millions): June 30, 2020 Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Asset-backed securities $ 5,501 $ (2) $ 125 $ (14) $ 5,610 $ 5,610 Commercial mortgage-backed securities 2,444 — 141 (3) 2,582 2,582 Corporates 12,643 (21) 420 (28) 13,014 13,014 Hybrids 996 — 15 (8) 1,003 1,003 Municipals 1,426 — 43 (1) 1,468 1,468 Residential mortgage-backed securities 941 (5) 5 (14) 927 927 U.S. Government 299 — 12 — 311 311 Foreign Governments 195 — 5 (1) 199 199 Total available-for-sale securities 24,445 (28) 766 (69) 25,114 25,114 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Commercial mortgage-backed/asset-backed securities 22 — — 22 22 Corporates 1,510 49 (3) 1,556 1,556 Hybrids 26 5 — 31 31 Municipals 90 3 — 93 93 Residential mortgage-backed securities 38 2 — 40 40 U.S. Government 282 7 (1) 288 288 Foreign Governments 61 1 (2) 60 60 Total available-for-sale securities 2,029 67 (6) 2,090 2,090 |
Investments Classified by Contractual Maturity Date | The amortized cost and fair value of fixed maturity available-for-sale securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations. June 30, 2020 (in millions) Amortized Cost Fair Value Corporates, Non-structured Hybrids, Municipal and Government securities: Due in one year or less $ 417 $ 416 Due after one year through five years 2,104 2,164 Due after five years through ten years 2,236 2,307 Due after ten years 10,776 11,080 Subtotal 15,533 15,967 Other securities which provide for periodic payments: Asset-backed securities 5,501 5,610 Commercial mortgage-backed securities 2,444 2,582 Structured hybrids 26 28 Residential mortgage-backed securities 941 927 Subtotal 8,912 9,147 Total fixed maturity available-for-sale securities $ 24,445 $ 25,114 |
Activity in Allowance for Credit Loses of Available-for-sale Securities Aggregated by Investment Category | The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category were as follows for the three and six months ended June 30, 2020 (in millions): For the three-months ended June 30, 2020 Additions Reductions Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Writeoffs charged against the allowance Balance at End of Period Available-for-sale securities Asset-backed securities $ — $ 7 $ (9) $ — $ — $ — $ — $ (2) Corporates (11) (2) (16) — 3 5 — (21) Hybrids — — (3) — 3 — — — Residential mortgage-backed securities — 2 (7) — — — — (5) Total available-for-sale securities $ (11) $ 7 $ (35) $ — $ — $ 6 $ 5 $ — $ (28) (1) Purchased credit deteriorated financial assets ("PCD") For the six-months ended June 30, 2020 Additions Reductions Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Writeoffs charged against the allowance Balance at End of Period Available-for-sale securities Asset-backed securities $ — $ 7 $ (9) $ — — $ — $ — $ — $ (2) Corporates — (10) (16) (3) — 3 5 — (21) Hybrids — — (3) — — 3 — — — Residential mortgage-backed securities — 2 (7) — — — — — (5) Total available-for-sale securities $ — $ (1) $ (35) $ (3) $ — $ 6 $ 5 $ — $ (28) (1) Purchased credit deteriorated financial assets ("PCD") |
Debt Securities, Available-for-sale, Purchased with Credit Deterioration | Purchased credit-deteriorated available-for-sale debt securities ("PCD"s) are AFS securities purchased at a discount, where part of that discount is attributable to credit . Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. The following table summarizes year to date PCD AFS security purchases (in millions). Purchased credit-deteriorated available-for-sale debt securities 6/30/2020 Purchase price $ 265 Allowance for credit losses at acquisition 35 Discount (or premiums) attributable to other factors 84 AFS purchased credit-deteriorated par value $ 384 |
Fair Value and Gross Unrealized Losses of Available-for-sale Securities | The fair value and gross unrealized losses of available-for-sale securities, excluding securities in an unrealized loss position with an allowance for expected credit loss, aggregated by investment category and duration of fair value below amortized cost as of June 30, 2020, and December 31, 2019 were as follows (dollars in millions): June 30, 2020 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Fair Value Gross Unrealized Fair Value Gross Unrealized Available-for-sale securities Asset-backed securities $ 900 $ (14) $ — $ — $ 900 $ (14) Commercial mortgage-backed securities 70 (3) — — 70 (3) Corporates 1,610 (25) 44 (3) 1,654 (28) Hybrids 422 (8) — — 422 (8) Municipals 160 (1) — — 160 (1) Residential mortgage-backed securities 570 (14) — — 570 (14) Foreign Government 35 — 6 (1) 41 (1) Total available-for-sale securities $ 3,767 $ (65) $ 50 $ (4) $ 3,817 $ (69) Total number of available-for-sale securities in an unrealized loss position less than twelve months 443 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 6 Total number of available-for-sale securities in an unrealized loss position 449 December 31, 2019 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Fair Value Gross Unrealized Fair Value Gross Unrealized Available-for-sale securities Corporates $ 98 $ (2) $ 51 $ (1) $ 149 $ (3) U.S. Government 62 (1) — — 62 (1) Foreign Government — — 33 (2) 33 (2) Total available-for-sale securities $ 160 $ (3) $ 84 $ (3) $ 244 $ (6) Total number of available-for-sale securities in an unrealized loss position less than twelve months 19 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 10 Total number of available-for-sale securities in an unrealized loss position 29 |
Schedule of Distribution of CMLs, Gross Valuation by Property Type and Geographic Region | The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables (dollars in millions): June 30, 2020 Gross Carrying Value % of Total Property Type: Hotel $ 19 3 % Industrial - General 37 6 % Industrial - Warehouse 12 2 % Multifamily 120 21 % Office 142 25 % Retail 150 26 % Other 96 17 % Total commercial mortgage loans, gross of valuation allowance $ 576 100 % Allowance for expected credit loss (2) Total commercial mortgage loans $ 574 U.S. Region: East North Central $ 63 11 % East South Central 51 9 % Middle Atlantic 77 13 % Mountain 48 9 % New England 43 7 % Pacific 149 26 % South Atlantic 73 13 % West North Central 13 2 % West South Central 59 10 % Total commercial mortgage loans, gross of valuation allowance $ 576 100 % Allowance for expected credit loss (2) Total commercial mortgage loans $ 574 |
Schedule of Investment in Mortgage Loans by Loan to Value and Debt Service Coverage Ratios | The following table presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios at June 30, 2020 (dollars in millions) : Debt-Service Coverage Ratios Total Amount % of Total Estimated Fair Value % of Total >1.25 1.00 - 1.25 June 30, 2020 LTV Ratios: Less than 50% $ 415 $ 26 $ 441 77 % $ 447 77 % 50% to 60% 102 — 102 18 % 103 18 % 60% to 75% 33 — 33 5 % 33 5 % Commercial mortgage loans $ 550 $ 26 $ 576 100 % $ 583 100 % |
Schedule of Residential Mortgage Loans by State | The distribution of RMLs by state with highest-to-lowest concentration are reflected in the following tables (dollars in millions): June 30, 2020 U.S. State: Unpaid Principal Balance % of Total California $ 216 18 % Florida 198 17 % New Jersey 113 9 % All Other States (1) 664 56 % Total mortgage loans $ 1,191 100 % (1) The individual concentration of each state is less than 8% as of June 30, 2020. |
Schedule of Loans with Credit Quality Indicators, Performing or Nonperforming | The credit quality of RMLs as at June 30, 2020, was as follows (dollars in millions): June 30, 2020 Performance indicators: Carrying Value % of Total Performing $ 1,142 95 % Non-performing 59 5 % Total residential mortgage loans, gross of valuation allowance $ 1,201 100 % Allowance for expected loan loss (26) — % Total residential mortgage loans $ 1,175 100 % |
Loans Segregated by Risk Rating Exposure | Loans segregated by risk rating exposure as of June 30, 2020, were as follows (in millions): June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Residential mortgages Current (less than 30 days past due) $ 231 $ 408 $ 51 $ 47 $ 62 $ 2 $ 801 30-89 days past due 72 241 25 1 2 — 341 Over 90 days past due 1 55 2 — 1 — 59 Total residential mortgages $ 304 $ 704 $ 78 $ 48 $ 65 $ 2 $ 1,201 Commercial mortgages Current (less than 30 days past due) $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 30-89 days past due — — — — — — — Over 90 days past due — — — — — — — Total commercial mortgage $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 June 30, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Commercial mortgages LTV Less than 50% $ 96 $ — $ 6 $ — $ — $ 339 $ 441 50% to 60% 34 — — — 11 57 102 60% to 75% 33 — — — — — 33 Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 Commercial mortgages DSCR Greater than 1.25x $ 144 $ — $ 6 $ — $ 11 $ 389 $ 550 1.00x - 1.25x 19 — — — — 7 26 Less than 1.00x — — — — — — — Total commercial mortgages $ 163 $ — $ 6 $ — $ 11 $ 396 $ 576 |
Financing Receivable, Nonaccrual | Non-accrual loans by amortized cost as at June 30, 2020, was as follows: Amortized cost of loans on non-accrual 6/30/2020 Residential mortgage: $ 39 Commercial mortgage: — Total non-accrual loans $ 39 |
Allowance for Expected Credit Losses on Loans | Changes in our allowance for expected credit losses on mortgage loans are recognized in Realized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings. Credit losses on purchase credit deteriorated (“PCD”) financial assets were recognized on the opening balance sheet for the amounts shown in the table below (in millions). June 30, 2020 Credit Losses on PCD Financial Assets Residential Mortgage Commercial Mortgage Total Provision for loan losses $ 19 $ 2 $ 21 For initial credit losses on purchased loans accounted for as PCD financial assets 7 — 7 Balance, June 30, 2020 $ 26 $ 2 $ 28 An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans as seen in the table below (in millions). 6/30/2020 Residential Mortgage $ 20 Commercial Mortgage — Total loans that are 90 days past due and still accruing $ 20 |
Schedule of Sources of Net Investment Income Reported | The major sources of Interest and investment income reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Fixed maturity securities, available-for-sale $ 117 $ 18 $ 134 $ 35 Equity securities 13 2 17 4 Preferred securities 11 7 17 12 Mortgage loans 7 — 7 — Invested cash and short-term investments 8 9 33 18 Other investments 7 24 8 46 Gross investment income 163 60 216 115 Investment expense (11) (1) (11) (2) Net investment income $ 152 $ 59 $ 205 $ 113 Realized Gains and Losses, net Details underlying Realized gains and losses, net reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net realized gains on fixed maturity available-for-sale securities $ 14 $ 1 $ 24 $ — Net realized/unrealized gains (losses) on equity securities 145 42 (58) 173 Net realized/unrealized gains (losses) on preferred securities 33 4 (74) 20 Realized losses on other invested assets (3) (6) (13) (10) Change in allowance for expected credit losses (21) — (31) — Derivatives and embedded derivatives: Realized gains on certain derivative instruments 10 — 10 — Unrealized gains on certain derivative instruments 4 — 4 — Change in fair value of reinsurance related embedded derivatives (1) (21) — (21) — Change in fair value of other derivatives and embedded derivatives 1 — 1 — Realized losses on derivatives and embedded derivatives (6) — (6) — Net investment gains (losses) $ 162 $ 41 $ (158) $ 183 |
Proceeds from Sale of Fixed Maturity Available-for-sale Securities | The proceeds from the sale of fixed-maturity available for-sale-securities and the gross gains and losses associated with those transactions were as follows (in millions): Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Proceeds $ 320 $ 137 $ 497 $ 372 Gross gains 17 1 29 2 Gross losses (5) — (7) (1) |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The carrying amounts of derivative instruments, including derivative instruments embedded in FIA contracts, as of June 30, 2020 is as follows (in millions): June 30, 2020 Assets: Derivative investments: Call options $ 332 Futures contracts 1 Other long-term investments: Other embedded derivatives 21 $ 354 Liabilities: Contractholder funds: FIA embedded derivative $ 2,952 Other liabilities: Reinsurance related embedded derivative 35 $ 2,987 |
Derivative Instruments, Gain (Loss) | The change in fair value of derivative instruments included in the accompanying unaudited Condensed Consolidated Statements of Earnings is as follows (in millions): Three Months Ended June 30, 2020 Net investment gains (losses): Call options $ 12 Futures contracts 2 Foreign currency forward — Other derivatives and embedded derivatives 1 Reinsurance related embedded derivatives (21) Total net investment losses $ (6) Benefits and other changes in policy reserves: FIA embedded derivatives $ 100 |
FGL's Exposure to Credit Loss on Call Options Held | Information regarding our exposure to credit loss on the call options it holds as of June 30, 2020, is presented in the following table (in millions): June 30, 2020 Counterparty Credit Rating Notional Fair Value Collateral Net Credit Risk Merrill Lynch AA-/*/A+ $ 2,873 $ 34 $ — $ 34 Deutsche Bank BBB/A3/BBB+ 23 1 1 — Morgan Stanley */A1/A+ 2,086 23 19 4 Barclay's Bank A+/A1/A 4,259 141 136 5 Canadian Imperial Bank of Commerce AA/Aa2/A+ 2,055 52 48 4 Wells Fargo A+/A2/A- 2,986 74 69 5 Goldman Sachs A/A3/BBB+ 738 7 5 2 Total $ 15,020 $ 332 $ 278 $ 54 (1) An * represents credit ratings that were not available. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consists of the following: June 30, December 31, (In millions) 4.50% Notes, net of discount $ 443 $ 443 5.50% Notes, net of discount 399 398 3.40% Notes, net of discount 643 — Term Loan 358 — Revolving Credit Facility (2) (3) 5.50% F&G Notes, net of discount 589 — F&G Credit Facility — — $ 2,430 $ 838 |
Schedule of Principal Maturities of Notes Payable | Gross principal maturities of notes payable at June 30, 2020 are as follows (in millions): 2020 (remaining) $ — 2021 360 2022 400 2023 — 2024 — Thereafter 1,650 $ 2,410 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Unfunded Commitments | A summary of unfunded commitments by invested asset class as of June 30, 2020 is included below (in millions): June 30, 2020 Asset Type Investment in unconsolidated affiliates $ 1,264 Fixed maturity securities, available-for-sale 177 Other assets 145 Residential mortgage loans 13 Total $ 1,599 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Summarized financial information concerning our reportable segments is shown in the following tables. On June 1, 2020, we completed our acquisition of F&G. As a result we have a new segment as of and for the three and six month periods ended June 30, 2020, F&G, which contains our fixed annuity and life insurance businesses. As of and for the three months ended June 30, 2020: Title F&G Corporate and Other Total (In millions) Title premiums $ 1,359 $ — $ 1,359 Other revenues 655 20 72 747 Revenues from external customers 2,014 20 72 2,106 Interest and investment income, including realized gains and losses 210 104 — 314 Total revenues 2,224 124 72 2,420 Depreciation and amortization 37 3 6 46 Interest expense 1 3 17 21 Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates 528 (58) (69) 401 Income tax expense (benefit) 130 (14) (27) 89 Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates 398 (44) (42) 312 Equity in earnings (loss) of unconsolidated affiliates 2 — (1) 1 Net earnings (loss) $ 400 $ (44) $ (43) $ 313 Assets $ 8,875 $ 38,311 $ 815 $ 48,001 Goodwill 2,462 1,725 265 4,452 As of and for the three months ended June 30, 2019: Title Corporate and Other Total (In millions) Title premiums $ 1,379 $ — $ 1,379 Other revenues 613 52 665 Revenues from external customers 1,992 52 2,044 Interest and investment income, including realized gains and losses 100 — 100 Total revenues 2,092 52 2,144 Depreciation and amortization 38 6 44 Interest expense — 12 12 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 387 (34) 353 Income tax expense (benefit) 95 (9) 86 Earnings (loss) before equity in earnings of unconsolidated affiliates 292 (25) 267 Equity in earnings of unconsolidated affiliates 3 — 3 Net earnings (loss) $ 295 $ (25) $ 270 Assets $ 9,040 $ 1,149 $ 10,189 Goodwill 2,461 264 2,725 As of and for the six months ended June 30, 2020: Title F&G Corporate and Other Total (In millions) Title premiums $ 2,637 $ — $ — $ 2,637 Other revenues 1,265 20 63 1,348 Revenues from external customers 3,902 20 63 3,985 Interest and investment income, including realized gains and losses (55) 104 (2) 47 Total revenues 3,847 124 61 4,032 Depreciation and amortization 74 3 12 89 Interest expense 1 3 29 33 Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates 475 (58) (102) 315 Income tax expense (benefit) 111 (14) (36) 61 Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates 364 (44) (66) 254 Equity in earnings (loss) of unconsolidated affiliates 3 — (1) 2 Net earnings (loss) $ 367 $ (44) $ (67) $ 256 Assets $ 8,875 $ 38,311 $ 815 $ 48,001 Goodwill 2,462 1,725 265 4,452 As of and for the six months ended June 30, 2019: Title Corporate and Other Total (In millions) Title premiums $ 2,371 $ — $ 2,371 Other revenues 1,094 105 1,199 Revenues from external customers 3,465 105 3,570 Interest and investment income, including realized gains and losses 290 6 296 Total revenues 3,755 111 3,866 Depreciation and amortization 77 11 88 Interest expense — 24 24 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 679 (62) 617 Income tax expense (benefit) 166 (15) 151 Earnings (loss) before equity in earnings of unconsolidated affiliates 513 (47) 466 Equity in earnings of unconsolidated affiliates 10 — 10 Net earnings (loss) $ 523 $ (47) $ 476 Assets $ 9,040 $ 1,149 $ 10,189 Goodwill 2,461 264 2,725 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow information | The following supplemental cash flow information is provided with respect to certain cash payment and non-cash investing and financing activities. Six months ended June 30, 2020 2019 Cash paid for: Interest $ 23 $ 22 Income taxes 12 78 Deferred sales inducements $ 6 $ — Non-cash investing and financing activities: Equity financing associated with the acquisition of F&G $ 577 $ — Change in proceeds of sales of investments available for sale receivable in period (25) (6) Change in purchases of investments available for sale payable in period 70 (4) Change in treasury stock purchases payable in period — — Lease liabilities recognized in exchange for lease right-of-use assets 13 15 Remeasurement of lease liabilities 30 42 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Our revenue consists of: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Revenue Stream Income Statement Classification Segment Total Revenue Revenue from insurance contracts: (in millions) Direct title insurance premiums Direct title insurance premiums Title $ 575 $ 625 $ 1,121 $ 1,065 Agency title insurance premiums Agency title insurance premiums Title 784 754 1,516 1,306 Life insurance premiums, insurance and investment product fees, and other Escrow, title-related and other fees F&G 20 — 20 — Home warranty Escrow, title-related and other fees Title 46 46 89 87 Total revenue from insurance contracts 1,425 1,425 2,746 2,458 Revenue from contracts with customers: Escrow fees Escrow, title-related and other fees Title 259 237 480 402 Other title-related fees and income Escrow, title-related and other fees Title 168 165 327 301 ServiceLink, excluding title premiums, escrow fees, and subservicing fees Escrow, title-related and other fees Title 86 97 192 180 Real estate technology Escrow, title-related and other fees Corporate and other 24 26 51 51 Real estate brokerage Escrow, title-related and other fees Corporate and other 6 14 12 21 Other Escrow, title-related and other fees Corporate and other 42 12 — 33 Total revenue from contracts with customers 585 551 1,062 988 Other revenue: Loan subservicing revenue Escrow, title-related and other fees Title 96 68 177 124 Interest and investment income Interest and investment income Various 152 59 205 113 Realized gains and losses, net Realized gains and losses, net Various 162 41 (158) 183 Total revenues Total revenues $ 2,420 $ 2,144 4,032 3,866 |
Information about Trade Receivables and Deferred Revenue | The following table provides information about trade receivables and deferred revenue: June 30, 2020 December 31, 2019 (In millions) Trade receivables $ 312 $ 321 Deferred revenue (contract liabilities) 110 111 |
Intangibles (Tables)
Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes Intangible Assets, VOBA and DAC DSI | A summary of the changes in the carrying amounts of the Company's VOBA, DAC and DSI intangible assets are as follows (in millions): VOBA DAC DSI Total Balance at Balance at December 31, 2019 $ — $ — $ — $ — F&G acquisition 1,890 — — 1,890 Deferrals — 28 6 34 Amortization (3) — — (3) Interest 3 — — 3 Unlocking — — — — Adjustment for net unrealized investment (gains) losses (101) (8) (2) (111) Balance at June 30, 2020 $ 1,789 $ 20 $ 4 $ 1,813 |
Estimated Amortization Expense for VOBA in Future Fiscal Periods | stimated amortization expense for VOBA in future fiscal periods is as follows (in millions): Estimated Amortization Expense Fiscal Year 2020 $ 95 2021 191 2022 230 2023 212 2024 194 Thereafter 968 |
Schedule of Other Indefinite-Lived Intangible Assets | Other intangible assets as of June 30, 2020 consist of the following (in millions): Cost Accumulated amortization Net carrying amount Weighted average useful life (years) Customer relationships and contracts $ 774 $ (576) $ 198 10 Computer software 384 (237) 147 2 to 10 Value of Distribution Asset (VODA) 185 (1) 184 15 Definite lived trademarks, tradenames, and other 73 (20) 53 10 Indefinite lived tradenames and other 40 N/A 40 Indefinite Total $ 622 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goo dwill as of December 31, 2019 and June 30, 2020 consists of the following: Title F&G Corporate and Other Total (In millions) Balance, December 31, 2019 $ 2,462 $ — $ 265 $ 2,727 Goodwill associated with the F&G acquisition — 1,725 — 1,725 Balance, June 30, 2020 $ 2,462 $ 1,725 $ 265 $ 4,452 |
F&G Reinsurance (Tables)
F&G Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
Effect of Reinsurance on Premiums Earned, Benefits Incurred and Reserve Changes | The effect of reinsurance on net premiums earned and net benefits incurred (benefits incurred and reserve changes) for the one month ended June 30, 2020 were as follows (in millions): One Month Ended June 30, 2020 Net Premiums Earned Net Benefits Incurred Direct $ 17 $ 155 Assumed — — Ceded (12) — Net $ 5 $ 155 |
Basis of Financial Statements -
Basis of Financial Statements - Recent Developments (Details) - USD ($) | Jul. 31, 2020 | Jul. 29, 2020 | Jun. 12, 2020 | Jun. 01, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 22, 2020 |
Business Acquisition [Line Items] | |||||||
Proceeds from issuance debt | $ 642,000,000 | ||||||
Repayment of principal borrowed | $ 640,000,000 | $ 0 | |||||
Subsequent Event | ServiceLink Holdings, LLC | |||||||
Business Acquisition [Line Items] | |||||||
Purchase of outstanding Class A units of minority owners | $ 90,000,000 | ||||||
Term Loan Credit Agreement | Term Loan | |||||||
Business Acquisition [Line Items] | |||||||
Line of credit facility | $ 1,000,000,000 | ||||||
Proceeds from issuance debt | $ 1,000,000,000 | ||||||
Repayment of principal borrowed | 640,000,000 | ||||||
Term Loan Credit Agreement | Term Loan | Subsequent Event | |||||||
Business Acquisition [Line Items] | |||||||
Repayment of principal borrowed | $ 100,000,000 | ||||||
3.400% Senior Notes due June 2030 | |||||||
Business Acquisition [Line Items] | |||||||
Proceeds from issuance debt | $ 642,000,000 | ||||||
Debt Instrument, interest rate, stated percentage | 3.40% | ||||||
Aggregate principal amount | $ 650,000,000 |
Basis of Financial Statements_2
Basis of Financial Statements - Income Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Income tax expense | $ 89 | $ 86 | $ 61 | $ 151 |
Income tax expense as percentage of earnings before income taxes, percent | 22.00% | 24.00% | 19.00% | 24.00% |
Basis of Financial Statements_3
Basis of Financial Statements - Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Antidilutive securities excluded from computation of EPS, less than, amount (shares) | 1 | 0 | 1 | 0 |
Basis of Financial Statements_4
Basis of Financial Statements - Benefits and Other Changes in Policy Reserves (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Annuities | Minimum | |
Ceded Credit Risk [Line Items] | |
Interest crediting rates for funds at subsidiaries | 0.50% |
Deferred Annuities | Maximum | |
Ceded Credit Risk [Line Items] | |
Interest crediting rates for funds at subsidiaries | 6.00% |
IUL's | Minimum | |
Ceded Credit Risk [Line Items] | |
Interest crediting rates for funds at subsidiaries | 3.00% |
IUL's | Maximum | |
Ceded Credit Risk [Line Items] | |
Interest crediting rates for funds at subsidiaries | 4.80% |
Basis of Financial Statements_5
Basis of Financial Statements - Future Policy Benefits (Details) - Life and Annuity Insurance Product Line | Jun. 30, 2020 |
Maximum | |
Ceded Credit Risk [Line Items] | |
Investment yield assumptions | 6.00% |
Minimum | |
Ceded Credit Risk [Line Items] | |
Investment yield assumptions | 2.50% |
Risks and Uncertainties - Narra
Risks and Uncertainties - Narrative (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2020USD ($)issuer | Dec. 31, 2019USD ($)issuer | |
Concentration Risk [Line Items] | ||
Exposure of FGL's invested assets | 0.00% | |
Number of issuers in investment | issuer | 0 | 0 |
Fair Value In Investments | $ 0 | |
Wilton Reassurance Company | ||
Concentration Risk [Line Items] | ||
Net amount recoverable | $ 1,478 | |
Kubera Reassurance Company | ||
Concentration Risk [Line Items] | ||
Net amount recoverable | 828 | |
Scottish Re | ||
Concentration Risk [Line Items] | ||
Net amount recoverable | 47 | |
Pavonia Life Insurance Company | ||
Concentration Risk [Line Items] | ||
Net amount recoverable | $ 85 | |
Minimum | ||
Concentration Risk [Line Items] | ||
Exposure of FGL's invested assets | 10.00% | |
Top Ten Holdings | ||
Concentration Risk [Line Items] | ||
Exposure of FGL's invested assets | 39.00% | |
Number of issuers in investment | issuer | 101 | |
Wells Fargo | ||
Concentration Risk [Line Items] | ||
Exposure of FGL's invested assets | 10.00% | |
All Financial Instruments | ||
Concentration Risk [Line Items] | ||
FGL's investment securities in the banking industry | $ 2,351 | $ 2,414 |
Exposure of FGL's invested assets | 9.00% | 9.00% |
All Financial Instruments | Banking Industry | ||
Concentration Risk [Line Items] | ||
Investment securities held by subsidiaries subject to specialized industry accounting principles, amortized cost | $ 2,307 | $ 2,325 |
Single Issuer | ||
Concentration Risk [Line Items] | ||
FGL's investment securities in the banking industry | $ 132 | $ 132 |
Exposure of FGL's invested assets | 1.00% | 1.00% |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - F&G - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Jun. 01, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Business Acquisition [Line Items] | ||||||
Percentage of outstanding equity acquired | 100.00% | |||||
Consideration transferred | $ 2,700 | |||||
Consideration transferred (in shares) | 24 | |||||
Cash paid for acquisition | $ 1,803 | |||||
Liability to former owners | $ 132 | |||||
Right to purchase and receive upon exercise in cash (in usd per share) | $ 8.18 | |||||
Consideration, cash paid per acquiree share (in usd per share) | $ 0.0833 | |||||
Shares converted, common and preferred (in shares) | 7 | |||||
Goodwill expected to be tax deductible | $ 16 | |||||
Total revenues | $ 124 | $ 2,770 | $ 2,596 | $ 4,151 | $ 4,848 | |
Pro forma net loss | $ 39 | $ (306) | $ (271) | $ (54) | $ (581) |
Acquisitions - Consideration Pa
Acquisitions - Consideration Paid (Details) - USD ($) $ in Millions | Jun. 01, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Business Acquisition [Line Items] | |||
Net cash paid for F&G | $ 976 | $ 0 | |
F&G | |||
Business Acquisition [Line Items] | |||
Cash paid for outstanding F&G shares | $ 1,803 | ||
Less: Cash Acquired | (827) | ||
Net cash paid for F&G | 976 | ||
Value of FNF share consideration | 772 | ||
Value of outstanding converted equity awards attributed to services already rendered | 28 | ||
Liability accrued to former owners of F&G common shares | 132 | ||
Total net consideration paid | $ 1,908 |
Acquisitions - Assets Acquired
Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Jun. 01, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 4,452 | $ 2,727 | $ 2,725 | |
F&G | ||||
Business Acquisition [Line Items] | ||||
Derivative instruments | $ 313 | |||
Mortgage loans | 1,754 | |||
Investments in unconsolidated affiliates | 1,019 | |||
Other long-term investments | 430 | |||
Short-term investments | 37 | |||
Trade and notes receivable | 1 | |||
Reinsurance recoverable | 3,241 | |||
Goodwill | 1,725 | |||
Prepaid expenses and other assets | 352 | |||
Lease assets | 8 | |||
Other intangible assets | 2,139 | |||
Assets of discontinued operations | 2,392 | |||
Total assets acquired | 36,728 | |||
Contractholder funds | 26,454 | |||
Future policy benefits | 4,106 | |||
Accounts payable and accrued liabilities | 858 | |||
Notes payable | 589 | |||
Funds withheld for reinsurance liabilities | 816 | |||
Lease liabilities | 9 | |||
Income taxes payable | (26) | |||
Deferred tax liability | (254) | |||
Liabilities of discontinued operations | 2,268 | |||
Total liabilities assumed | 34,820 | |||
Net assets acquired | 1,908 | |||
F&G | Fixed maturity securities | ||||
Business Acquisition [Line Items] | ||||
Securities | 22,389 | |||
F&G | Preferred securities | ||||
Business Acquisition [Line Items] | ||||
Securities | 876 | |||
F&G | Equity securities | ||||
Business Acquisition [Line Items] | ||||
Securities | $ 52 |
Acquisitions - Carrying Value a
Acquisitions - Carrying Value and Estimated Useful Lives (Details) - USD ($) $ in Millions | Jun. 01, 2020 | Jun. 30, 2020 |
Value of Distribution Asset (VODA) | ||
Property, Plant and Equipment [Line Items] | ||
Weighted average useful life (years) | 15 years | |
F&G | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | $ 2,139 | |
F&G | PVFP | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | 1,890 | |
F&G | Value of Distribution Asset (VODA) | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | $ 185 | |
Weighted average useful life (years) | 15 years | |
F&G | Tradename | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | $ 43 | |
Weighted average useful life (years) | 10 years | |
F&G | Software | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | $ 21 | |
Weighted average useful life (years) | 2 years |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - F&G - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Business Acquisition [Line Items] | |||||
Total revenues | $ 124 | $ 2,770 | $ 2,596 | $ 4,151 | $ 4,848 |
Net earnings attributable to FNF common shareholders | $ (39) | $ 306 | $ 271 | $ 54 | $ 581 |
Summary of Reserve for Title _3
Summary of Reserve for Title Claim Losses (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Loss Contingencies [Line Items] | ||
Change in reinsurance recoverable | $ (55) | $ 0 |
Title | ||
Loss Contingencies [Line Items] | ||
Beginning balance | 1,509 | 1,488 |
Change in reinsurance recoverable | (1) | 0 |
Claim loss provision related to: | ||
Current year | 119 | 107 |
Prior years | 0 | 0 |
Total title claim loss provision | 119 | 107 |
Claims paid, net of recoupments related to: | ||
Current year | (2) | (2) |
Prior years | (97) | (113) |
Total title claims paid, net of recoupments | (99) | (115) |
Ending balance of claim loss reserve for title insurance | $ 1,528 | $ 1,480 |
Provision for title insurance claim losses as a percentage of title insurance premiums | 4.50% | 4.50% |
Summary of Reserve for Title _4
Summary of Reserve for Title Claim Losses - Narrative (Details) - Pending Litigation - USD ($) $ in Thousands | Jul. 07, 2020 | Jun. 29, 2020 | May 29, 2020 | Mar. 16, 2020 | Mar. 06, 2020 | Dec. 13, 2019 | Oct. 22, 2019 |
Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co., Chicago Title Co. | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 75,000 | ||||||
Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, and ABC Funding Strategies, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 250,000 | ||||||
Wakefield Capital, LLC, Wakefield Investments, LLC, 2Budz Holding, LLC, Doug and Kristine Heidrich, and Jeff and Heidi Orr v. Chicago Title Co. and Chicago Title Ins. Co. | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 7,000 | ||||||
Randolph L. Levin, et al., v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, Betty Elixman, et al | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 38,000 | ||||||
Mark Atherton, et al., v. Chicago Title Co. and Chicago Title Ins. Co. | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 30,000 | ||||||
Susan Heller Fenley Separate Property Trust, Susan Heller Fenley Inherited Roth IRA, Shelley Lynn Tarditi Trust and ROJ, LLC v. Chicago Title Co., Chicago Title Ins. Co. et al | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 6,000 | ||||||
Yuan Yu and Polly Yu v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 1,000 | ||||||
Laurie Peterson v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman | Subsequent Event | |||||||
Loss Contingencies [Line Items] | |||||||
Plaintiffs claim losses amount | $ 35,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Carrying Amounts of Assets and Liabilities at Estimated Fair Value Measured on a Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Fixed maturity securities, available for sale | $ 25,114 | $ 2,090 |
Derivative investments | 333 | 0 |
Total financial assets at fair value | 2,920 | |
Level 1 | ||
Assets | ||
Cash and cash equivalents | 2,353 | 1,376 |
Equity securities | 810 | |
Derivative investments | 1 | |
Short term investments | 209 | 876 |
Total financial assets at fair value | 4,053 | 3,127 |
Liabilities | ||
Fair value of future policy benefits | 0 | |
Derivatives: | ||
Total financial liabilities at fair value | 0 | |
Level 2 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Equity securities | 0 | |
Derivative investments | 332 | |
Short term investments | 0 | 0 |
Total financial assets at fair value | 22,986 | 2,331 |
Liabilities | ||
Fair value of future policy benefits | 0 | |
Derivatives: | ||
Total financial liabilities at fair value | 35 | |
Level 3 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Equity securities | 1 | |
Derivative investments | 0 | |
Short term investments | 0 | 0 |
Total financial assets at fair value | 2,920 | 138 |
Liabilities | ||
Fair value of future policy benefits | 5 | |
Derivatives: | ||
Total financial liabilities at fair value | 2,957 | |
Fair Value | ||
Assets | ||
Cash and cash equivalents | 2,353 | 1,376 |
Equity securities | 811 | |
Derivative investments | 333 | |
Short term investments | 209 | 876 |
Total financial assets at fair value | 29,959 | 5,596 |
Liabilities | ||
Fair value of future policy benefits | 5 | |
Derivatives: | ||
Total financial liabilities at fair value | 2,992 | |
Carrying Value | ||
Assets | ||
Cash and cash equivalents | 2,353 | 1,376 |
Equity securities | 811 | |
Derivative investments | 333 | |
Short term investments | 209 | 876 |
Total financial assets at fair value | 29,959 | 5,596 |
Liabilities | ||
Fair value of future policy benefits | 5 | |
Derivatives: | ||
Total financial liabilities at fair value | 2,992 | |
FIA embedded derivatives, included in contractholder funds | Level 1 | ||
Derivatives: | ||
Derivative liability | 0 | |
FIA embedded derivatives, included in contractholder funds | Level 2 | ||
Derivatives: | ||
Derivative liability | 0 | |
FIA embedded derivatives, included in contractholder funds | Level 3 | ||
Derivatives: | ||
Derivative liability | 2,952 | |
FIA embedded derivatives, included in contractholder funds | Fair Value | ||
Derivatives: | ||
Derivative liability | 2,952 | |
FIA embedded derivatives, included in contractholder funds | Carrying Value | ||
Derivatives: | ||
Derivative liability | 2,952 | |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Level 1 | ||
Derivatives: | ||
Derivative liability | 0 | |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Level 2 | ||
Derivatives: | ||
Derivative liability | 35 | |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Level 3 | ||
Derivatives: | ||
Derivative liability | 0 | |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Fair Value | ||
Derivatives: | ||
Derivative liability | 35 | |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Carrying Value | ||
Derivatives: | ||
Derivative liability | 35 | |
Asset-backed securities | ||
Assets | ||
Fixed maturity securities, available for sale | 5,610 | |
Asset-backed securities | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | |
Asset-backed securities | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 4,594 | |
Asset-backed securities | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 1,016 | |
Asset-backed securities | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 5,610 | |
Asset-backed securities | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 5,610 | |
Commercial mortgage-backed securities | ||
Assets | ||
Fixed maturity securities, available for sale | 2,582 | 22 |
Commercial mortgage-backed securities | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
Commercial mortgage-backed securities | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 2,556 | 22 |
Commercial mortgage-backed securities | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 26 | 0 |
Commercial mortgage-backed securities | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 2,582 | 22 |
Commercial mortgage-backed securities | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 2,582 | 22 |
Corporates | ||
Assets | ||
Fixed maturity securities, available for sale | 13,014 | 1,556 |
Corporates | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
Corporates | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 11,750 | 1,540 |
Corporates | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 1,264 | 17 |
Corporates | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 13,014 | 1,557 |
Corporates | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 13,014 | 1,557 |
Hybrids | ||
Assets | ||
Fixed maturity securities, available for sale | 1,003 | 31 |
Hybrids | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 286 | 0 |
Hybrids | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 713 | 30 |
Hybrids | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 4 | 0 |
Hybrids | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 1,003 | 30 |
Hybrids | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 1,003 | 30 |
Municipals | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
Municipals | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 1,428 | 93 |
Municipals | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 40 | 0 |
Municipals | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 1,468 | 93 |
Municipals | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 1,468 | 93 |
Residential mortgage-backed securities | ||
Assets | ||
Fixed maturity securities, available for sale | 927 | 40 |
Residential mortgage-backed securities | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
Residential mortgage-backed securities | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 418 | 40 |
Residential mortgage-backed securities | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 509 | 0 |
Residential mortgage-backed securities | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 927 | 40 |
Residential mortgage-backed securities | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 927 | 40 |
U.S. Government | ||
Assets | ||
Fixed maturity securities, available for sale | 311 | 288 |
U.S. Government | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
U.S. Government | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 311 | 288 |
U.S. Government | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
U.S. Government | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 311 | 288 |
U.S. Government | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 311 | 288 |
Foreign Governments | ||
Assets | ||
Fixed maturity securities, available for sale | 199 | 60 |
Foreign Governments | Level 1 | ||
Assets | ||
Fixed maturity securities, available for sale | 0 | 0 |
Foreign Governments | Level 2 | ||
Assets | ||
Fixed maturity securities, available for sale | 183 | 60 |
Foreign Governments | Level 3 | ||
Assets | ||
Fixed maturity securities, available for sale | 16 | 0 |
Foreign Governments | Fair Value | ||
Assets | ||
Fixed maturity securities, available for sale | 199 | 60 |
Foreign Governments | Carrying Value | ||
Assets | ||
Fixed maturity securities, available for sale | 199 | 60 |
Equity securities | Level 1 | ||
Assets | ||
Equity securities | 702 | |
Equity securities | Level 2 | ||
Assets | ||
Equity securities | 0 | |
Equity securities | Level 3 | ||
Assets | ||
Equity securities | 1 | |
Equity securities | Fair Value | ||
Assets | ||
Equity securities | 703 | |
Equity securities | Carrying Value | ||
Assets | ||
Equity securities | 703 | |
Preferred securities | ||
Assets | ||
Equity securities | 1,203 | 323 |
Preferred securities | Level 1 | ||
Assets | ||
Equity securities | 502 | 65 |
Preferred securities | Level 2 | ||
Assets | ||
Equity securities | 701 | 258 |
Preferred securities | Level 3 | ||
Assets | ||
Equity securities | 0 | 0 |
Preferred securities | Fair Value | ||
Assets | ||
Equity securities | 1,203 | 323 |
Preferred securities | Carrying Value | ||
Assets | ||
Equity securities | 1,203 | 323 |
Other long-term investments | Level 1 | ||
Assets | ||
Other long-term investments | 0 | 0 |
Other long-term investments | Level 2 | ||
Assets | ||
Other long-term investments | 0 | 0 |
Other long-term investments | Level 3 | ||
Assets | ||
Other long-term investments | 44 | 120 |
Other long-term investments | Fair Value | ||
Assets | ||
Other long-term investments | 44 | 120 |
Other long-term investments | Carrying Value | ||
Assets | ||
Other long-term investments | $ 44 | $ 120 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Narrative (Detail) $ in Millions | Jun. 30, 2020USD ($)$ / Contract |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Undiscounted cash flows used in fair value measurement | $ | $ (5) |
Investment in unconsolidated affiliates | Income-Approach | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative, strike price | $ / Contract | 0 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Quantitative Information of Unobservable Inputs Used for Level Three Fair Value Measurements of Financial Instruments on Recurring Basis (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | $ 2,920 |
Liabilities, fair value | 2,957 |
Broker-quoted | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 763 |
Broker-quoted | Commercial mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 26 |
Broker-quoted | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 317 |
Broker-quoted | Residential mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 509 |
Broker-quoted | Credit Linked Note | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | $ 23 |
Offered quotes | 100.00% |
Third-Party Valuation | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | $ 253 |
Third-Party Valuation | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 947 |
Third-Party Valuation | Hybrids | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 4 |
Third-Party Valuation | Municipals | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 40 |
Third-Party Valuation | Foreign Governments | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | 16 |
Black Scholes model | Investment in unconsolidated affiliates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | $ 21 |
Market value of fund | 100.00% |
Future policy benefits | Discounted cash flow | Future policy benefits, nonperformance risk spread | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Liabilities, fair value | $ 5 |
Fixed indexed annuities | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Liabilities, fair value | $ 2,952 |
Minimum | Broker-quoted | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 98.66% |
Minimum | Broker-quoted | Commercial mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 89.90% |
Minimum | Broker-quoted | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 13.70% |
Minimum | Broker-quoted | Residential mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 0.00% |
Minimum | Third-Party Valuation | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 0.00% |
Minimum | Third-Party Valuation | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 84.04% |
Minimum | Third-Party Valuation | Hybrids | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 109.54% |
Minimum | Third-Party Valuation | Municipals | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 122.62% |
Minimum | Third-Party Valuation | Foreign Governments | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 98.72% |
Minimum | Future policy benefits | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Risk margin to reflect uncertainty | 0.00% |
Minimum | Future policy benefits | Discounted cash flow | Future policy benefits, nonperformance risk spread | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Non-performance spread | 0.00% |
Minimum | Fixed indexed annuities | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Non-performance spread | 1.19% |
Market value of option | 0.00% |
Treasury rates | 0.13% |
Mortality multiplier | 80.00% |
Surrender rates | 0.50% |
Partial withdrawals | 2.00% |
Option cost | 0.05% |
Maximum | Broker-quoted | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 122.19% |
Maximum | Broker-quoted | Commercial mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 126.22% |
Maximum | Broker-quoted | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 111.18% |
Maximum | Broker-quoted | Residential mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 106.86% |
Maximum | Third-Party Valuation | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 112.65% |
Maximum | Third-Party Valuation | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 124.53% |
Maximum | Third-Party Valuation | Hybrids | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 109.54% |
Maximum | Third-Party Valuation | Municipals | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 122.62% |
Maximum | Third-Party Valuation | Foreign Governments | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | 99.90% |
Maximum | Future policy benefits | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Risk margin to reflect uncertainty | 0.50% |
Maximum | Fixed indexed annuities | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Non-performance spread | 1.19% |
Market value of option | 40.32% |
Treasury rates | 1.41% |
Mortality multiplier | 80.00% |
Surrender rates | 75.00% |
Partial withdrawals | 3.50% |
Option cost | 16.61% |
Weighted Average | Broker-quoted | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (104.48%) |
Weighted Average | Broker-quoted | Commercial mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (125.18%) |
Weighted Average | Broker-quoted | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (102.46%) |
Weighted Average | Broker-quoted | Residential mortgage-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (106.86%) |
Weighted Average | Third-Party Valuation | Asset-backed securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (83.58%) |
Weighted Average | Third-Party Valuation | Corporates | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (105.51%) |
Weighted Average | Third-Party Valuation | Hybrids | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (109.54%) |
Weighted Average | Third-Party Valuation | Municipals | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (122.62%) |
Weighted Average | Third-Party Valuation | Foreign Governments | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Offered quotes | (99.53%) |
Weighted Average | Future policy benefits | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Risk margin to reflect uncertainty | (0.50%) |
Weighted Average | Fixed indexed annuities | Discounted cash flow | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Non-performance spread | (1.19%) |
Market value of option | (2.22%) |
Treasury rates | (0.77%) |
Mortality multiplier | (80.00%) |
Surrender rates | (5.72%) |
Partial withdrawals | (2.55%) |
Option cost | (2.19%) |
Insurance Subsidiary | Income-Approach | Equity securities | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Assets, fair value | $ 1 |
Yield | 2.61% |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Changes to Fair Value of Financial Instruments Level 3 (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | $ 15 | $ 125 | $ 138 | |
F&G Acquisition | 2,754 | 2,754 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 5 | (64) | $ 12 |
Assets, Total Gains (Losses) Included in AOCI | 22 | 0 | 22 | (1) |
Assets, Purchases | 92 | 0 | 92 | 5 |
Assets, Sales | 0 | 0 | 0 | (1) |
Assets, Settlements | (23) | 0 | (23) | 0 |
Assets, Net transfer In (Out) of Level 3 | 60 | (2) | 1 | (5) |
Balance at End of Period | 2,920 | 128 | 2,920 | 128 |
Change in Unrealized Incl in OCI | 25 | 25 | ||
Liabilities | ||||
Balance at Beginning of Period | 0 | 0 | 118 | |
F&G Acquisition | 2,857 | 2,857 | ||
Liabilities, Total Gains (Losses) Included in Earnings | 100 | 100 | ||
Liabilities, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Liabilities, Purchases | 0 | 0 | ||
Liabilities, Sales | 0 | 0 | ||
Liabilities, Settlements | 0 | 0 | ||
Liabilities, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 2,957 | 2,957 | ||
Change in Unrealized Incl in OCI | 0 | |||
Future policy benefits | ||||
Liabilities | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 5 | 5 | ||
Liabilities, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Liabilities, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Liabilities, Purchases | 0 | 0 | ||
Liabilities, Sales | 0 | 0 | ||
Liabilities, Settlements | 0 | 0 | ||
Liabilities, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 5 | 5 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
FIA embedded derivatives, included in contractholder funds | ||||
Liabilities | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 2,852 | 2,852 | ||
Liabilities, Total Gains (Losses) Included in Earnings | 100 | 100 | ||
Liabilities, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Liabilities, Purchases | 0 | 0 | ||
Liabilities, Sales | 0 | 0 | ||
Liabilities, Settlements | 0 | 0 | ||
Liabilities, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 2,952 | 2,952 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Asset-backed securities | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 854 | 854 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 9 | 9 | ||
Assets, Purchases | 91 | 91 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | (5) | (5) | ||
Assets, Net transfer In (Out) of Level 3 | 67 | 67 | ||
Balance at End of Period | 1,016 | 1,016 | ||
Change in Unrealized Incl in OCI | 9 | 9 | ||
Commercial mortgage-backed securities | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 26 | 26 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 26 | 26 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Corporates | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 14 | 18 | 17 | 17 |
F&G Acquisition | 1,238 | 1,238 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | (3) | 1 |
Assets, Total Gains (Losses) Included in AOCI | 26 | 0 | 26 | (1) |
Assets, Purchases | 0 | 0 | 0 | 5 |
Assets, Sales | 0 | 0 | 0 | (1) |
Assets, Settlements | (14) | 0 | (14) | 0 |
Assets, Net transfer In (Out) of Level 3 | 0 | (2) | 0 | (5) |
Balance at End of Period | 1,264 | 16 | 1,264 | 16 |
Change in Unrealized Incl in OCI | 26 | 26 | ||
Hybrids | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 4 | 4 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 4 | 4 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Municipals | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 38 | 38 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 2 | 2 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 40 | 40 | ||
Change in Unrealized Incl in OCI | 3 | 3 | ||
Residential mortgage-backed securities | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 534 | 534 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | (15) | (15) | ||
Assets, Purchases | 1 | 1 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | (4) | (4) | ||
Assets, Net transfer In (Out) of Level 3 | (7) | (7) | ||
Balance at End of Period | 509 | 509 | ||
Change in Unrealized Incl in OCI | (13) | (13) | ||
Foreign Governments | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 16 | 16 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 16 | 16 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Equity securities | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 1 | 1 | ||
F&G Acquisition | 1 | 1 | ||
Assets, Total Gains (Losses) Included in Earnings | (1) | (1) | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 1 | 1 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Available-for-sale embedded derivative | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 20 | 20 | ||
Assets, Total Gains (Losses) Included in Earnings | 1 | 1 | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 21 | 21 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Credit linked note | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 0 | 0 | ||
F&G Acquisition | 23 | 23 | ||
Assets, Total Gains (Losses) Included in Earnings | 0 | 0 | ||
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | ||
Assets, Purchases | 0 | 0 | ||
Assets, Sales | 0 | 0 | ||
Assets, Settlements | 0 | 0 | ||
Assets, Net transfer In (Out) of Level 3 | 0 | 0 | ||
Balance at End of Period | 23 | 23 | ||
Change in Unrealized Incl in OCI | 0 | 0 | ||
Other long-term investments | ||||
Fixed maturity securities available-for-sale: | ||||
Balance at Beginning of Period | 107 | 120 | 101 | |
F&G Acquisition | 0 | |||
Assets, Total Gains (Losses) Included in Earnings | 5 | (61) | 11 | |
Assets, Total Gains (Losses) Included in AOCI | 0 | 0 | 0 | |
Assets, Purchases | 0 | 0 | 0 | |
Assets, Sales | 0 | 0 | 0 | |
Assets, Settlements | 0 | 0 | 0 | |
Assets, Net transfer In (Out) of Level 3 | 0 | (59) | 0 | |
Balance at End of Period | $ 0 | $ 112 | 0 | $ 112 |
Change in Unrealized Incl in OCI | $ 0 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Carrying Value and Estimated Fair Value of Financial Instruments (Details) $ in Millions | Jun. 30, 2020USD ($) |
Fair Value | |
Assets | |
Commercial mortgage loans | $ 583 |
Residential mortgage loans | 1,177 |
Policy loans | 26 |
Total | 1,786 |
Liabilities | |
Investment contracts, included in contractholder funds | 20,666 |
Debt instrument | 2,596 |
Total | 23,262 |
Carrying Value | |
Assets | |
Commercial mortgage loans | 574 |
Residential mortgage loans | 1,175 |
Policy loans | 30 |
Total | 1,779 |
Liabilities | |
Investment contracts, included in contractholder funds | 23,683 |
Debt instrument | 2,430 |
Total | 26,113 |
Level 1 | |
Assets | |
Commercial mortgage loans | 0 |
Residential mortgage loans | 0 |
Policy loans | 0 |
Total | 0 |
Liabilities | |
Investment contracts, included in contractholder funds | 0 |
Debt instrument | 0 |
Total | 0 |
Level 2 | |
Assets | |
Commercial mortgage loans | 0 |
Residential mortgage loans | 0 |
Policy loans | 0 |
Total | 0 |
Liabilities | |
Investment contracts, included in contractholder funds | 0 |
Debt instrument | 2,596 |
Total | 2,596 |
Level 3 | |
Assets | |
Commercial mortgage loans | 583 |
Residential mortgage loans | 1,177 |
Policy loans | 26 |
Total | 1,786 |
Liabilities | |
Investment contracts, included in contractholder funds | 20,666 |
Debt instrument | 0 |
Total | $ 20,666 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments - NAV (Details) $ in Millions | Jun. 30, 2020USD ($) |
Private Equity Funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Investments in unconsolidated affiliates | $ 1,191 |
Investments - Consolidated Inve
Investments - Consolidated Investments (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Available-for-sale securities | |||
Amortized Cost | $ 24,445 | $ 2,029 | |
Allowance for Expected Credit Losses | (28) | $ (11) | 0 |
Gross Unrealized Gains | 766 | 67 | |
Gross Unrealized Losses | (69) | (6) | |
Fair value | 25,114 | 2,090 | |
Asset-backed securities | |||
Available-for-sale securities | |||
Amortized Cost | 5,501 | ||
Allowance for Expected Credit Losses | (2) | 0 | 0 |
Gross Unrealized Gains | 125 | ||
Gross Unrealized Losses | (14) | ||
Fair value | 5,610 | ||
Commercial mortgage-backed securities | |||
Available-for-sale securities | |||
Amortized Cost | 2,444 | 22 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 141 | 0 | |
Gross Unrealized Losses | (3) | 0 | |
Fair value | 2,582 | 22 | |
Corporates | |||
Available-for-sale securities | |||
Amortized Cost | 12,643 | 1,510 | |
Allowance for Expected Credit Losses | (21) | (11) | 0 |
Gross Unrealized Gains | 420 | 49 | |
Gross Unrealized Losses | (28) | (3) | |
Fair value | 13,014 | 1,556 | |
Hybrids | |||
Available-for-sale securities | |||
Amortized Cost | 996 | 26 | |
Allowance for Expected Credit Losses | 0 | 0 | 0 |
Gross Unrealized Gains | 15 | 5 | |
Gross Unrealized Losses | (8) | 0 | |
Fair value | 1,003 | 31 | |
Municipals | |||
Available-for-sale securities | |||
Amortized Cost | 1,426 | 90 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 43 | 3 | |
Gross Unrealized Losses | (1) | 0 | |
Fair value | 1,468 | 93 | |
Residential mortgage-backed securities | |||
Available-for-sale securities | |||
Amortized Cost | 941 | 38 | |
Allowance for Expected Credit Losses | (5) | $ 0 | 0 |
Gross Unrealized Gains | 5 | 2 | |
Gross Unrealized Losses | (14) | 0 | |
Fair value | 927 | 40 | |
U.S. Government | |||
Available-for-sale securities | |||
Amortized Cost | 299 | 282 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 12 | 7 | |
Gross Unrealized Losses | 0 | (1) | |
Fair value | 311 | 288 | |
Foreign Governments | |||
Available-for-sale securities | |||
Amortized Cost | 195 | 61 | |
Allowance for Expected Credit Losses | 0 | ||
Gross Unrealized Gains | 5 | 1 | |
Gross Unrealized Losses | (1) | (2) | |
Fair value | $ 199 | $ 60 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2015 | |
Debt Securities, Available-for-sale [Line Items] | |||
Non-income producing investment fair value | $ 0 | $ 0 | |
Accrued interest receivable | 237 | $ 16 | |
FHLB collateral pledged | $ 1,511 | ||
Commercial mortgage loans, percentage of investments | 2.00% | ||
DSC ratio, amortization period | 25 years | ||
Cannae Holdings Inc. | Equity securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment owned, (in shares) | 5,706,134 | 5,706,134 | |
Investment owned, at fair value | $ 234 | $ 212 | |
Commitment to Invest | |||
Debt Securities, Available-for-sale [Line Items] | |||
Unfunded investment commitment | 1,599 | ||
Crescent Capital BDC Inc. | Commitment to Invest | |||
Debt Securities, Available-for-sale [Line Items] | |||
Unfunded investment commitment | $ 83 | ||
Golub Capital Partners 10, L.P. | Commitment to Invest | |||
Debt Securities, Available-for-sale [Line Items] | |||
Other investments | 1,264 | ||
Unfunded investment commitment | 1,111 | ||
Variable Interest Entity, Primary Beneficiary | B I S A Co Invest Fund I I L. P. | |||
Debt Securities, Available-for-sale [Line Items] | |||
Other investments | $ 65 | ||
United States | |||
Debt Securities, Available-for-sale [Line Items] | |||
Residential mortgage loans, location percentage | 100.00% | ||
Available-for-sale Securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Assets held by insurance regulators | $ 18,400 | $ 422 | |
Commercial mortgage loans | |||
Debt Securities, Available-for-sale [Line Items] | |||
Loan to value, threshold (less than) | 75.00% | ||
Residential mortgage loans | |||
Debt Securities, Available-for-sale [Line Items] | |||
% of Total | 4.00% |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Value of Fixed Maturity Available-for-Sale Securities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Due in one year or less, Amortized Cost | $ 417 | |
Due after one year through five years, Amortized Cost | 2,104 | |
Due after five years through ten years, Amortized Cost | 2,236 | |
Due after ten years, Amortized Cost | 10,776 | |
Subtotal, Amortized Cost | 15,533 | |
Other securities which provide for periodic payments, Amortized Cost | 8,912 | |
Amortized Cost | 24,445 | $ 2,029 |
Due in one year or less, Fair Value | 416 | |
Due after one year through five years, Fair Value | 2,164 | |
Due after five years through ten years, Fair Value | 2,307 | |
Due after ten years, Fair Value | 11,080 | |
Subtotal, Fair Value | 15,967 | |
Other securities which provide for periodic payments, Fair Value | 9,147 | |
Total fixed maturity available-for-sale securities, Fair Value | 25,114 | |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Other securities which provide for periodic payments, Amortized Cost | 5,501 | |
Amortized Cost | 5,501 | |
Other securities which provide for periodic payments, Fair Value | 5,610 | |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Other securities which provide for periodic payments, Amortized Cost | 2,444 | |
Amortized Cost | 2,444 | $ 22 |
Other securities which provide for periodic payments, Fair Value | 2,582 | |
Structured hybrids | ||
Debt Securities, Available-for-sale [Line Items] | ||
Other securities which provide for periodic payments, Amortized Cost | 26 | |
Other securities which provide for periodic payments, Fair Value | 28 | |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Other securities which provide for periodic payments, Amortized Cost | 941 | |
Other securities which provide for periodic payments, Fair Value | $ 927 |
Investments - Allowance for Cre
Investments - Allowance for Credit Loss Aggregated By Investment Category (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | $ (11) | $ 0 |
For credit losses on securities for which losses were not previously recorded | 7 | (1) |
For initial credit losses on purchased securities accounted for as PCD financial assets | (35) | (35) |
(Additions) reductions in allowance recorded on previously impaired securities | 0 | (3) |
For securities sold during the period | 6 | 6 |
For securities intended/required to be sold prior to recovery of amortized cost basis | 5 | 5 |
Writeoffs charged against the allowance | 0 | 0 |
Balance at End of Period | (28) | (28) |
Asset-backed securities | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | 0 | 0 |
For credit losses on securities for which losses were not previously recorded | 7 | 7 |
For initial credit losses on purchased securities accounted for as PCD financial assets | (9) | (9) |
(Additions) reductions in allowance recorded on previously impaired securities | 0 | 0 |
For securities sold during the period | 0 | 0 |
For securities intended/required to be sold prior to recovery of amortized cost basis | 0 | 0 |
Writeoffs charged against the allowance | 0 | 0 |
Balance at End of Period | (2) | (2) |
Corporates | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | (11) | 0 |
For credit losses on securities for which losses were not previously recorded | (2) | (10) |
For initial credit losses on purchased securities accounted for as PCD financial assets | (16) | (16) |
(Additions) reductions in allowance recorded on previously impaired securities | 0 | (3) |
For securities sold during the period | 3 | 3 |
For securities intended/required to be sold prior to recovery of amortized cost basis | 5 | 5 |
Writeoffs charged against the allowance | 0 | 0 |
Balance at End of Period | (21) | (21) |
Hybrids | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | 0 | 0 |
For credit losses on securities for which losses were not previously recorded | 0 | 0 |
For initial credit losses on purchased securities accounted for as PCD financial assets | (3) | (3) |
(Additions) reductions in allowance recorded on previously impaired securities | 0 | 0 |
For securities sold during the period | 3 | 3 |
For securities intended/required to be sold prior to recovery of amortized cost basis | 0 | 0 |
Writeoffs charged against the allowance | 0 | 0 |
Balance at End of Period | 0 | 0 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | 0 | 0 |
For credit losses on securities for which losses were not previously recorded | 2 | 2 |
For initial credit losses on purchased securities accounted for as PCD financial assets | (7) | (7) |
(Additions) reductions in allowance recorded on previously impaired securities | 0 | 0 |
For securities sold during the period | 0 | 0 |
For securities intended/required to be sold prior to recovery of amortized cost basis | 0 | 0 |
Writeoffs charged against the allowance | 0 | 0 |
Balance at End of Period | $ (5) | $ (5) |
Investments - Allowance for C_2
Investments - Allowance for Credit Losses (Details) $ in Millions | 1 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for loan losses | $ 21 | |
For initial credit losses on purchased loans accounted for as PCD financial assets | 7 | |
Ending Balance | 28 | $ 28 |
Financing Receivable, Recorded Investment, Aging [Abstract] | ||
Total loans that are 90 days past due and still accruing | 20 | 20 |
Debt Securities, Available-for-sale, Purchased with Credit Deterioration, Amount at Purchase Price [Abstract] | ||
Purchase price | 265 | |
Allowance for credit losses at acquisition | 35 | |
Discount (or premiums) attributable to other factors | 84 | |
AFS purchased credit-deteriorated par value | 384 | |
Residential Portfolio Segment | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for loan losses | 19 | |
For initial credit losses on purchased loans accounted for as PCD financial assets | 7 | |
Ending Balance | 26 | 26 |
Financing Receivable, Recorded Investment, Aging [Abstract] | ||
Total loans that are 90 days past due and still accruing | 20 | 20 |
Commercial Portfolio Segment | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for loan losses | 2 | |
For initial credit losses on purchased loans accounted for as PCD financial assets | 0 | |
Ending Balance | 2 | 2 |
Financing Receivable, Recorded Investment, Aging [Abstract] | ||
Total loans that are 90 days past due and still accruing | $ 0 | $ 0 |
Investments - Fair Value and Gr
Investments - Fair Value and Gross Unrealized Losses of Available-for-Sale Securities (Details) $ in Millions | Jun. 30, 2020USD ($)Security | Dec. 31, 2019USD ($)Security |
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | $ 3,767 | $ 160 |
Gross Unrealized Losses Less than 12 months | (65) | (3) |
Fair Value, 12 Months or longer | 50 | 84 |
Gross Unrealized Losses, 12 months or longer | (4) | (3) |
Total Fair Value | 3,817 | 244 |
Total Gross Unrealized Losses | $ (69) | $ (6) |
Total number of available-for-sale securities in an unrealized loss position less than twelve months | Security | 443 | 19 |
Total number of available-for-sale securities in an unrealized loss position twelve months or longer | Security | 6 | 10 |
Total number of available-for-sale securities in an unrealized loss position | Security | 449 | 29 |
Asset-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | $ 900 | |
Gross Unrealized Losses Less than 12 months | (14) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 900 | |
Total Gross Unrealized Losses | (14) | |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 70 | |
Gross Unrealized Losses Less than 12 months | (3) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 70 | |
Total Gross Unrealized Losses | (3) | |
Corporates | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 1,610 | $ 98 |
Gross Unrealized Losses Less than 12 months | (25) | (2) |
Fair Value, 12 Months or longer | 44 | 51 |
Gross Unrealized Losses, 12 months or longer | (3) | (1) |
Total Fair Value | 1,654 | 149 |
Total Gross Unrealized Losses | (28) | (3) |
Hybrids | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 422 | |
Gross Unrealized Losses Less than 12 months | (8) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 422 | |
Total Gross Unrealized Losses | (8) | |
Municipals | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 160 | |
Gross Unrealized Losses Less than 12 months | (1) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 160 | |
Total Gross Unrealized Losses | (1) | |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 570 | |
Gross Unrealized Losses Less than 12 months | (14) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 570 | |
Total Gross Unrealized Losses | (14) | |
U.S. Government | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 62 | |
Gross Unrealized Losses Less than 12 months | (1) | |
Fair Value, 12 Months or longer | 0 | |
Gross Unrealized Losses, 12 months or longer | 0 | |
Total Fair Value | 62 | |
Total Gross Unrealized Losses | (1) | |
Foreign Governments | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Values, Less than 12 months | 35 | 0 |
Gross Unrealized Losses Less than 12 months | 0 | 0 |
Fair Value, 12 Months or longer | 6 | 33 |
Gross Unrealized Losses, 12 months or longer | (1) | (2) |
Total Fair Value | 41 | 33 |
Total Gross Unrealized Losses | $ (1) | $ (2) |
Investments - Schedule of Comme
Investments - Schedule of Commercial Mortgage Loan Investment (Details) $ in Millions | Jun. 30, 2020USD ($) |
Commercial Portfolio Segment | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 576 |
Allowance for expected credit loss | (2) |
Total commercial mortgage loans | $ 574 |
% of Total | 100.00% |
East North Central | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 63 |
% of Total | 11.00% |
East South Central | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 51 |
% of Total | 9.00% |
Middle Atlantic | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 77 |
% of Total | 13.00% |
Mountain | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 48 |
% of Total | 9.00% |
New England | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 43 |
% of Total | 7.00% |
Pacific | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 149 |
% of Total | 26.00% |
South Atlantic | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 73 |
% of Total | 13.00% |
West North Central | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 13 |
% of Total | 2.00% |
West South Central | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 59 |
% of Total | 10.00% |
Hotel | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 19 |
% of Total | 3.00% |
Industrial - General | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 37 |
% of Total | 6.00% |
Industrial - Warehouse | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 12 |
% of Total | 2.00% |
Multifamily | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 120 |
% of Total | 21.00% |
Office | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 142 |
% of Total | 25.00% |
Retail | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 150 |
% of Total | 26.00% |
Other | |
Schedule of Investments [Line Items] | |
Gross Carrying Value | $ 96 |
% of Total | 17.00% |
Investments - Recorded Investme
Investments - Recorded Investment in CMLs by LTV and DSC Ratio Categories (Details) - Commercial Portfolio Segment $ in Millions | Jun. 30, 2020USD ($) |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 576 |
% of Total | 100.00% |
Fair Value | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 583 |
% of Total | 100.00% |
Greater than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 550 |
Greater than 1.00 but less than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | 26 |
Less than 50% | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 441 |
% of Total | 77.00% |
Less than 50% | Fair Value | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 447 |
% of Total | 77.00% |
Less than 50% | Greater than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 415 |
Less than 50% | Greater than 1.00 but less than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | 26 |
LTV 50 to 60 Percent | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 102 |
% of Total | 18.00% |
LTV 50 to 60 Percent | Fair Value | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 103 |
% of Total | 18.00% |
LTV 50 to 60 Percent | Greater than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 102 |
LTV 50 to 60 Percent | Greater than 1.00 but less than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | 0 |
LTV 60 to 75 Percent | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 33 |
% of Total | 5.00% |
LTV 60 to 75 Percent | Fair Value | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 33 |
% of Total | 5.00% |
LTV 60 to 75 Percent | Greater than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 33 |
LTV 60 to 75 Percent | Greater than 1.00 but less than 1.25 | |
Debt Securities, Available-for-sale [Line Items] | |
Unpaid Principal Balance | $ 0 |
Investments - Schedule of Resid
Investments - Schedule of Residential Mortgage Loan Investment (Details) $ in Millions | Jun. 30, 2020USD ($) |
Total Mortgage Loans | |
Unpaid Principal Balance | $ 1,191 |
% of Total | 100.00% |
California | |
Unpaid Principal Balance | $ 216 |
% of Total | 18.00% |
Florida | |
Unpaid Principal Balance | $ 198 |
% of Total | 17.00% |
New Jersey | |
Unpaid Principal Balance | $ 113 |
% of Total | 9.00% |
All Other States | |
Unpaid Principal Balance | $ 664 |
% of Total | 56.00% |
Investments - Credit Quality of
Investments - Credit Quality of RMLs (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Loans, net | $ 1,749 | $ 0 |
Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Carrying Value | $ 1,142 | |
% of Total | 95.00% | |
Non-performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Carrying Value | $ 59 | |
% of Total | 5.00% | |
Residential Portfolio Segment | Over 90 days past due | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Carrying Value | $ 1,201 | |
Allowance for expected loan loss | 26 | |
Loans, net | $ 1,175 | |
% of Total | 100.00% | |
Allowance % of Total | 0.00% |
Investments - Loans Segregated
Investments - Loans Segregated By Risk Rating (Details) $ in Millions | Jun. 30, 2020USD ($) |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Total non-accrual loans | $ 39 |
Residential Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 304 |
2019 | 704 |
2018 | 78 |
2017 | 48 |
2016 | 65 |
Prior | 2 |
Financing Receivable, before Allowance for Credit Loss, Total | 1,201 |
Total non-accrual loans | 39 |
Residential Portfolio Segment | Current (less than 30 days past due) | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 231 |
2019 | 408 |
2018 | 51 |
2017 | 47 |
2016 | 62 |
Prior | 2 |
Financing Receivable, before Allowance for Credit Loss, Total | 801 |
Residential Portfolio Segment | 30-89 days past due | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 72 |
2019 | 241 |
2018 | 25 |
2017 | 1 |
2016 | 2 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | 341 |
Residential Portfolio Segment | Over 90 days past due | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 1 |
2019 | 55 |
2018 | 2 |
2017 | 0 |
2016 | 1 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | 59 |
Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 163 |
2019 | 0 |
2018 | 6 |
2017 | 0 |
2016 | 11 |
Prior | 396 |
Financing Receivable, before Allowance for Credit Loss, Total | 576 |
Total non-accrual loans | 0 |
Commercial Portfolio Segment | Greater than 1.25 | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 144 |
2019 | 0 |
2018 | 6 |
2017 | 0 |
2016 | 11 |
Prior | 389 |
Financing Receivable, before Allowance for Credit Loss, Total | 550 |
Commercial Portfolio Segment | Greater than 1.00 but less than 1.25 | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 19 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 7 |
Financing Receivable, before Allowance for Credit Loss, Total | 26 |
Commercial Portfolio Segment | Less than 1.00 | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | 0 |
Commercial Portfolio Segment | Less than 50% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 96 |
2019 | 0 |
2018 | 6 |
2017 | 0 |
2016 | 0 |
Prior | 339 |
Financing Receivable, before Allowance for Credit Loss, Total | 441 |
Commercial Portfolio Segment | LTV 50 to 60 Percent | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 34 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 11 |
Prior | 57 |
Financing Receivable, before Allowance for Credit Loss, Total | 102 |
Commercial Portfolio Segment | LTV 60 to 75 Percent | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 33 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | 33 |
Commercial Portfolio Segment | Current (less than 30 days past due) | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 163 |
2019 | 0 |
2018 | 6 |
2017 | 0 |
2016 | 11 |
Prior | 396 |
Financing Receivable, before Allowance for Credit Loss, Total | 576 |
Commercial Portfolio Segment | 30-89 days past due | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | 0 |
Commercial Portfolio Segment | Over 90 days past due | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Financing Receivable, before Allowance for Credit Loss, Total | $ 0 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Schedule of Investments [Line Items] | ||||
Gross investment income | $ 163 | $ 60 | $ 216 | $ 115 |
Investment expense | (11) | (1) | (11) | (2) |
Net investment income | 152 | 59 | 205 | 113 |
Fixed maturity securities, available-for-sale | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | 117 | 18 | 134 | 35 |
Equity securities | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | 13 | 2 | 17 | 4 |
Preferred securities | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | 11 | 7 | 17 | 12 |
Commercial mortgage loans | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | 7 | 0 | 7 | 0 |
Invested cash and short-term investments | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | 8 | 9 | 33 | 18 |
Other investments | ||||
Schedule of Investments [Line Items] | ||||
Gross investment income | $ 7 | $ 24 | $ 8 | $ 46 |
Investments - Investment Gains
Investments - Investment Gains (Losses) Net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Schedule of Investments [Line Items] | ||||
Net realized gains on fixed maturity available-for-sale securities | $ 14 | $ 1 | $ 24 | $ 0 |
Realized losses on other invested assets | (3) | (6) | (13) | (10) |
Change in allowance for expected credit losses | (21) | 0 | (31) | 0 |
Realized gains on certain derivative instruments | 10 | 0 | 10 | 0 |
Unrealized gains on certain derivative instruments | 4 | 0 | 4 | 0 |
Change in fair value of reinsurance related embedded derivatives | (21) | 0 | (21) | 0 |
Change in fair value of other derivatives and embedded derivatives | 1 | 0 | 1 | 0 |
Realized losses on derivatives and embedded derivatives | (6) | 0 | (6) | 0 |
Net investment gains (losses) | 162 | 41 | (158) | 183 |
Equity securities | ||||
Schedule of Investments [Line Items] | ||||
Net realized/unrealized gains (losses) on equity securities | 145 | 42 | (58) | 173 |
Preferred securities | ||||
Schedule of Investments [Line Items] | ||||
Net realized/unrealized gains (losses) on equity securities | $ 33 | $ 4 | $ (74) | $ 20 |
Investments - Proceeds From The
Investments - Proceeds From The Sale of Fixed-Maturity Available For-Sale-Securities (Details) - Total fixed maturities - Available-for-sale Securities - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Proceeds | $ 320 | $ 137 | $ 497 | $ 372 |
Gross gains | 17 | 1 | 29 | 2 |
Loss on sale of investments | $ (5) | $ 0 | $ (7) | $ (1) |
Derivative Financial Instrume_3
Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) $ in Millions | Jun. 30, 2020USD ($) |
Derivative [Line Items] | |
Total asset derivatives | $ 354 |
Total liability derivatives | 2,987 |
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | |
Derivative [Line Items] | |
Total liability derivatives | 35 |
Call options | |
Derivative [Line Items] | |
Total asset derivatives | 332 |
Futures contracts | Derivative Instruments | |
Derivative [Line Items] | |
Total asset derivatives | 1 |
Other derivatives and embedded derivatives | Investment in unconsolidated affiliates | |
Derivative [Line Items] | |
Total asset derivatives | 21 |
FIA embedded derivative | Contractholder funds | |
Derivative [Line Items] | |
Total liability derivatives | $ 2,952 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Change in Fair Value of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | $ (21) | $ 0 | $ (21) | $ 0 |
Change In Fair Value Of Derivatives | (6) | |||
Call options | Net investment (losses) gains | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | 12 | |||
Futures contracts | Net investment (losses) gains | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | 2 | |||
Foreign currency forward | Net investment (losses) gains | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | 0 | |||
Other derivatives and embedded derivatives | Net investment (losses) gains | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | 1 | |||
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities | Net investment (losses) gains | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | (21) | |||
FIA embedded derivative | ||||
Derivative [Line Items] | ||||
Change in fair value of reinsurance related embedded derivatives | $ 100 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($)contract | |
Other derivatives and embedded derivatives | |
Derivative [Line Items] | |
Term of contract, term one | 1 year |
Term of contract, term two | 2 years |
Term of contract, term three | 3 years |
Term of contract, term four | 5 years |
Call options | Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Collateral posted | $ 278 |
Maximum amount of loss due to credit risk | 54 |
Call options | Derivatives For Trading And Investment | Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Collateral posted | 278 |
Maximum amount of loss due to credit risk | 54 |
Call options | Cash and Cash Equivalents | Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Collateral posted | $ 278 |
Futures contracts | |
Derivative [Line Items] | |
Number of instruments held | contract | 559,000,000 |
Collateral held | $ 6 |
Derivative Financial Instrume_6
Derivative Financial Instruments - FGL's Exposure to Credit Loss on Call Options Held (Detail) | Jun. 30, 2020USD ($) |
Derivatives, Fair Value [Line Items] | |
Fair Value | $ 354,000,000 |
Call options | |
Derivatives, Fair Value [Line Items] | |
Fair Value | 332,000,000 |
Not Designated as Hedging Instrument | Call options | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 15,020,000,000 |
Fair Value | 332,000,000 |
Collateral | 278,000,000 |
Net Credit Risk | 54,000,000 |
Not Designated as Hedging Instrument | Call options | Merrill Lynch | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 2,873,000,000 |
Fair Value | 34,000,000 |
Collateral | 0 |
Net Credit Risk | 34,000,000 |
Not Designated as Hedging Instrument | Call options | Deutsche Bank | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 23,000,000 |
Fair Value | 1,000,000 |
Collateral | 1,000,000 |
Net Credit Risk | 0 |
Not Designated as Hedging Instrument | Call options | Morgan Stanley | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 2,086,000,000 |
Fair Value | 23,000,000 |
Collateral | 19,000,000 |
Net Credit Risk | 4,000,000 |
Not Designated as Hedging Instrument | Call options | Barclay's Bank | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 4,259,000,000 |
Fair Value | 141,000,000 |
Collateral | 136,000,000 |
Net Credit Risk | 5,000,000 |
Not Designated as Hedging Instrument | Call options | Canadian Imperial Bank of Commerce | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 2,055,000,000 |
Fair Value | 52,000,000 |
Collateral | 48,000,000 |
Net Credit Risk | 4,000,000 |
Not Designated as Hedging Instrument | Call options | Wells Fargo | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 2,986,000,000 |
Fair Value | 74,000,000 |
Collateral | 69,000,000 |
Net Credit Risk | 5,000,000 |
Not Designated as Hedging Instrument | Call options | Goldman Sachs | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 738,000,000 |
Fair Value | 7,000,000 |
Collateral | 5,000,000 |
Net Credit Risk | $ 2,000,000 |
Notes Payable - Schedule of Lon
Notes Payable - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | May 16, 2019 | Aug. 13, 2018 | Aug. 28, 2012 |
Debt Instrument [Line Items] | |||||
Debt | $ 2,430 | $ 838 | |||
3.40% Notes, net of discount | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, interest rate, stated percentage | 3.40% | ||||
Debt | $ 643 | 0 | |||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt | $ 358 | 0 | |||
5.50% F& G Notes | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, interest rate, stated percentage | 5.50% | ||||
Debt | $ 589 | 0 | |||
F&G Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt | $ 0 | 0 | |||
Unsecured notes | 4.50% Notes, net of discount | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, interest rate, stated percentage | 4.50% | 4.50% | 4.50% | ||
Debt | $ 443 | 443 | |||
Unsecured notes | 5.50% Notes, net of discount | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, interest rate, stated percentage | 5.50% | 5.50% | |||
Debt | $ 399 | 398 | |||
Line of Credit | Revolving Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt | $ 2 | $ 3 |
Notes Payable - Long Term Debt
Notes Payable - Long Term Debt Narrative (Details) | Jul. 31, 2020USD ($) | Jun. 12, 2020USD ($) | Jun. 01, 2020USD ($) | Apr. 22, 2020USD ($) | Apr. 20, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Apr. 27, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance debt | $ 642,000,000 | |||||||
Repayment of principal borrowed | $ 640,000,000 | $ 0 | ||||||
Outstanding principal | 2,410,000,000 | |||||||
Draw on revolving credit facility | 1,000,000,000 | $ 0 | ||||||
F&G | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility | $ 250,000,000 | |||||||
Term Loan | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Floor interest rate | 0.0075 | |||||||
Term Loan | LIBOR | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 2.00% | |||||||
Term Loan | LIBOR | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 0.03% | |||||||
Term Loan Credit Agreement | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance debt | 1,000,000,000 | |||||||
Repayment of principal borrowed | 640,000,000 | |||||||
Line of credit facility | $ 1,000,000,000 | |||||||
Draw on revolving credit facility | 1,000,000,000 | |||||||
Term Loan Credit Agreement | Term Loan | Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayment of principal borrowed | $ 100,000,000 | |||||||
Term Loan Credit Agreement | Term Loan | Fed Funds Effective Rate Overnight Index Swap Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 0.0005% | |||||||
Term Loan Credit Agreement | Term Loan | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 1.00% | |||||||
Floor interest rate | 0.0175 | |||||||
Term Loan Credit Agreement | Term Loan | LIBOR | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 1.00% | |||||||
Term Loan Credit Agreement | Term Loan | LIBOR | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as percent) | 2.00% | |||||||
3.40% Notes due June 15, 2030 | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 650,000,000 | |||||||
Debt Instrument, interest rate, stated percentage | 3.40% | |||||||
Revolving Credit Facility | Line of Credit | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility | $ 800,000,000 | |||||||
Outstanding principal | $ 0 | |||||||
5.50% F&G Senior Notes due 2025 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of senior notes | $ 547,000,000 | |||||||
5.50% F&G Senior Notes due 2025 | F&G | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 550,000,000 | |||||||
Debt Instrument, interest rate, stated percentage | 5.50% | |||||||
Price as percent of par on offering of unsecured Notes | 9950.00% |
Notes Payable - 4.50% Notes (De
Notes Payable - 4.50% Notes (Details) - 4.50 % Notes Due August 2028 - Unsecured notes - USD ($) | Jun. 30, 2020 | May 16, 2019 | Aug. 13, 2018 |
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 450,000,000 | ||
Debt Instrument, interest rate, stated percentage | 4.50% | 4.50% | 4.50% |
Price as percent of par on offering of unsecured Notes | 99.252% | ||
Annual interest rate | 4.594% |
Notes Payable - Existing Credit
Notes Payable - Existing Credit Agreement (Details) - USD ($) | Jun. 30, 2020 | Apr. 27, 2017 |
Debt Instrument [Line Items] | ||
Outstanding principal | $ 2,410,000,000 | |
Revolving Credit Facility | Line of Credit | Revolving Credit Facility Due April 2022 | ||
Debt Instrument [Line Items] | ||
Line of credit facility | $ 800,000,000 | |
Outstanding principal | 0 | |
Debt issuance costs | 2,000,000 | |
Remaining borrowing capacity | $ 800,000,000 |
Notes Payable - 5.50% Notes (De
Notes Payable - 5.50% Notes (Details) - Unsecured notes - 5.50% notes due September 2022 - USD ($) | Jun. 30, 2020 | Aug. 28, 2012 |
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 400,000,000 | |
Debt Instrument, interest rate, stated percentage | 5.50% | 5.50% |
Notes Payable - Principal Matur
Notes Payable - Principal Maturities of Notes Payable (Details) $ in Millions | Jun. 30, 2020USD ($) |
Maturities of Long-term Debt [Abstract] | |
2020 (remaining) | $ 0 |
2021 | 360 |
2022 | 400 |
2023 | 0 |
2024 | 0 |
Thereafter | 1,650 |
Total long term debt | $ 2,410 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) shares in Millions, $ in Millions | Jun. 27, 2018 | Jun. 30, 2020 | May 26, 2020 | Dec. 31, 2019 |
Other Commitments [Line Items] | ||||
Estimated litigation liability | $ 22 | $ 22 | ||
Multiplier applied to damages | 1.50% | |||
F&G | Kingstown Dissenters | ||||
Other Commitments [Line Items] | ||||
Shares owned (in shares) | 12 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Investment Commitments (Details) - Commitment to Invest $ in Millions | Jun. 30, 2020USD ($) |
Other Commitments [Line Items] | |
Unfunded investment commitment | $ 1,599 |
Investment in unconsolidated affiliates | |
Other Commitments [Line Items] | |
Unfunded investment commitment | 1,264 |
Fixed maturity securities, available-for-sale | |
Other Commitments [Line Items] | |
Unfunded investment commitment | 177 |
Other assets | |
Other Commitments [Line Items] | |
Unfunded investment commitment | 145 |
Residential mortgage loans | |
Other Commitments [Line Items] | |
Unfunded investment commitment | $ 13 |
Dividends (Details)
Dividends (Details) - $ / shares | Jul. 22, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Subsequent Event [Line Items] | |||||
Cash dividend per common share (in dollars per share) | $ 0.33 | $ 0.31 | $ 0.66 | $ 0.62 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Cash dividend per common share (in dollars per share) | $ 0.33 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||
Title premiums | $ 1,359 | $ 1,379 | $ 2,637 | $ 2,371 | |
Escrow, title-related and other fees | 747 | 665 | 1,348 | 1,199 | |
Revenues from external customers | 2,106 | 2,044 | 3,985 | 3,570 | |
Interest and investment income, including realized gains and losses | 314 | 100 | 47 | 296 | |
Revenues | 2,420 | 2,144 | 4,032 | 3,866 | |
Depreciation and amortization | 46 | 44 | 89 | 88 | |
Interest expense | 21 | 12 | 33 | 24 | |
Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates | 401 | 353 | 315 | 617 | |
Income tax benefit | 89 | 86 | 61 | 151 | |
Earnings (loss) before equity in earnings of unconsolidated affiliates | 312 | 267 | 254 | 466 | |
Equity in earnings (loss) of unconsolidated affiliates | 1 | 3 | 2 | 10 | |
Net earnings | 318 | 270 | 261 | 476 | |
Assets | 48,001 | 10,189 | 48,001 | 10,189 | $ 10,677 |
Goodwill | 4,452 | 2,725 | 4,452 | 2,725 | $ 2,727 |
Net earnings from continuing operations | 313 | 270 | 256 | 476 | |
Corporate and Other | |||||
Segment Reporting Information [Line Items] | |||||
Title premiums | 0 | 0 | 0 | ||
Escrow, title-related and other fees | 72 | 52 | 63 | 105 | |
Revenues from external customers | 72 | 52 | 63 | 105 | |
Interest and investment income, including realized gains and losses | 0 | 0 | (2) | 6 | |
Revenues | 72 | 52 | 61 | 111 | |
Depreciation and amortization | 6 | 6 | 12 | 11 | |
Interest expense | 17 | 12 | 29 | 24 | |
Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates | (69) | (34) | (102) | (62) | |
Income tax benefit | (27) | (9) | (36) | (15) | |
Earnings (loss) before equity in earnings of unconsolidated affiliates | (42) | (25) | (66) | (47) | |
Equity in earnings (loss) of unconsolidated affiliates | (1) | 0 | (1) | 0 | |
Assets | 815 | 1,149 | 815 | 1,149 | |
Goodwill | 265 | 264 | 265 | 264 | |
Net earnings from continuing operations | (43) | (25) | (67) | (47) | |
Operating Segments | Title | |||||
Segment Reporting Information [Line Items] | |||||
Title premiums | 1,359 | 1,379 | 2,637 | 2,371 | |
Escrow, title-related and other fees | 655 | 613 | 1,265 | 1,094 | |
Revenues from external customers | 2,014 | 1,992 | 3,902 | 3,465 | |
Interest and investment income, including realized gains and losses | 210 | 100 | (55) | 290 | |
Revenues | 2,224 | 2,092 | 3,847 | 3,755 | |
Depreciation and amortization | 37 | 38 | 74 | 77 | |
Interest expense | 1 | 0 | 1 | 0 | |
Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates | 528 | 387 | 475 | 679 | |
Income tax benefit | 130 | 95 | 111 | 166 | |
Earnings (loss) before equity in earnings of unconsolidated affiliates | 398 | 292 | 364 | 513 | |
Equity in earnings (loss) of unconsolidated affiliates | 2 | 3 | 3 | 10 | |
Assets | 8,875 | 9,040 | 8,875 | 9,040 | |
Goodwill | 2,462 | 2,461 | 2,462 | 2,461 | |
Net earnings from continuing operations | 400 | $ 295 | 367 | $ 523 | |
Operating Segments | F&G | |||||
Segment Reporting Information [Line Items] | |||||
Title premiums | 0 | 0 | |||
Escrow, title-related and other fees | 20 | 20 | |||
Revenues from external customers | 20 | 20 | |||
Interest and investment income, including realized gains and losses | 104 | 104 | |||
Revenues | 124 | 124 | |||
Depreciation and amortization | 3 | 3 | |||
Interest expense | 3 | 3 | |||
Earnings (loss) before income taxes and equity in earnings (loss) of unconsolidated affiliates | (58) | (58) | |||
Income tax benefit | (14) | (14) | |||
Earnings (loss) before equity in earnings of unconsolidated affiliates | (44) | (44) | |||
Equity in earnings (loss) of unconsolidated affiliates | 0 | 0 | |||
Assets | 38,311 | 38,311 | |||
Goodwill | 1,725 | 1,725 | |||
Net earnings from continuing operations | $ (44) | $ (44) |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash paid for: | |||
Interest | $ 23 | $ 22 | |
Income taxes | 12 | 78 | |
Non-cash investing and financing activities: | |||
Equity financing associated with the acquisition of F&G | $ 577 | 0 | |
Change in proceeds of sales of investments available for sale receivable in period | (25) | (6) | |
Change in purchases of investments available for sale payable in period | (70) | 4 | |
Change in treasury stock purchases payable in period | 0 | 0 | |
Lease liabilities recognized in exchange for lease right-of-use assets | 13 | 15 | |
Remeasurement of lease liabilities | $ 30 | $ 42 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 585 | $ 551 | $ 1,062 | $ 988 |
Interest and investment income | 152 | 59 | 205 | 113 |
Realized gains and losses, net | 162 | 41 | (158) | 183 |
Total revenues | 2,420 | 2,144 | 4,032 | 3,866 |
Title | ||||
Disaggregation of Revenue [Line Items] | ||||
Loan subservicing revenue | 96 | 68 | 177 | 124 |
Title | Direct title insurance premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 575 | 625 | 1,121 | 1,065 |
Title | Agency title insurance premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 784 | 754 | 1,516 | 1,306 |
Title | Home warranty | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 46 | 46 | 89 | 87 |
Title | Insurance contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 1,425 | 1,425 | 2,746 | 2,458 |
Title | Escrow fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 259 | 237 | 480 | 402 |
Title | Other title-related fees and income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 168 | 165 | 327 | 301 |
Title | ServiceLink, excluding title premiums, escrow fees, and subservicing fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 86 | 97 | 192 | 180 |
F&G | Life Insurance Premiums, Insurance and Investment Product Fees, Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 20 | 0 | 20 | 0 |
Corporate and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 72 | 52 | 61 | 111 |
Corporate and other | Real estate technology | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 24 | 26 | 51 | 51 |
Corporate and other | Real estate brokerage | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 6 | 14 | 12 | 21 |
Corporate and other | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 42 | $ 12 | $ 0 | $ 33 |
Revenue Recognition - Informati
Revenue Recognition - Information about Receivables and Deferred Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Trade receivables | $ 312 | $ 312 | $ 321 |
Deferred revenue (contract liabilities) | 110 | $ 110 | $ 111 |
Policy period | 1 year | ||
Revenue recognized | $ 35 | $ 77 |
Intangibles - Summary of Change
Intangibles - Summary of Changes in Carrying Amounts of Intangible Assets Including DAC, VOBA , and DSI (Detail) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total | |||
Balance at beginning of period | $ 0 | ||
F&G acquisition | 1,890 | ||
Deferrals | $ 34 | ||
Amortization | (3) | ||
Interest | 3 | ||
Unlocking | 0 | ||
Adjustment for net unrealized investment (gains) losses | (111) | ||
Balance at end of period | 1,813 | 1,813 | |
VOBA | |||
Total | |||
Balance at beginning of period | 0 | ||
F&G acquisition | 1,890 | ||
Deferrals | 0 | ||
Amortization | (3) | ||
Interest | 3 | ||
Unlocking | 0 | ||
Adjustment for net unrealized investment (gains) losses | (101) | ||
Balance at end of period | 1,789 | 1,789 | |
DAC | |||
Total | |||
Balance at beginning of period | 0 | ||
F&G acquisition | 0 | ||
Deferrals | 28 | ||
Amortization | 0 | ||
Interest | 0 | ||
Unlocking | 0 | ||
Adjustment for net unrealized investment (gains) losses | (8) | ||
Balance at end of period | 20 | 20 | |
DSI | |||
Total | |||
Balance at beginning of period | 0 | ||
F&G acquisition | 0 | ||
Deferrals | 6 | $ 0 | |
Amortization | 0 | ||
Interest | 0 | ||
Unlocking | 0 | ||
Adjustment for net unrealized investment (gains) losses | (2) | ||
Balance at end of period | $ 4 | $ 4 |
Intangibles - Narrative (Detail
Intangibles - Narrative (Detail) - USD ($) | 1 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 01, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Unearned revenue liability | $ 0 | $ 0 | |
Deferrals | (4,000,000) | ||
Amortization expense | 0 | ||
Interest | 0 | ||
Unlocking | 0 | ||
Unrealized investment gain (losses) | $ 4,000,000 | ||
VOBA | |||
Finite-Lived Intangible Assets [Line Items] | |||
Adjustment for net unrealized investment gains | $ 101,000,000 | ||
VOBA | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Interest accrual rate utilized to calculate accretion of interest | 0.00% | ||
VOBA | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Interest accrual rate utilized to calculate accretion of interest | 4.66% | ||
DAC | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cumulative adjustments for net unrealized investment gains | $ 8,000,000 | ||
Deferred sales inducement, unrealized investment gain | $ 2,000,000 |
Intangibles - Estimated Amortiz
Intangibles - Estimated Amortization Expense for VOBA in Future Fiscal Periods (Detail) $ in Millions | Jun. 30, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 95 |
2021 | 191 |
2022 | 230 |
2023 | 212 |
2024 | 194 |
Thereafter | $ 968 |
Intangibles - Definite and Inde
Intangibles - Definite and Indefinite Lived Intangible Assets (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Customer relationships and contracts | |
Finite-Lived Intangible Assets [Line Items] | |
Cost | $ 774 |
Accumulated amortization | (576) |
Net carrying amount | $ 198 |
Weighted average useful life (years) | 10 years |
Software | |
Finite-Lived Intangible Assets [Line Items] | |
Cost | $ 384 |
Accumulated amortization | (237) |
Net carrying amount | $ 147 |
Software | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life (years) | 2 years |
Software | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life (years) | 10 years |
Value of Distribution Asset (VODA) | |
Finite-Lived Intangible Assets [Line Items] | |
Cost | $ 185 |
Accumulated amortization | (1) |
Net carrying amount | $ 184 |
Weighted average useful life (years) | 15 years |
FGL | |
Finite-Lived Intangible Assets [Line Items] | |
Intangibles, net | $ 622 |
FGL | Licensing Agreements | |
Finite-Lived Intangible Assets [Line Items] | |
Indefinite-lived, cost | 40 |
FGL | Trade names | |
Finite-Lived Intangible Assets [Line Items] | |
Cost | 73 |
Accumulated amortization | (20) |
Net carrying amount | $ 53 |
Weighted average useful life (years) | 10 years |
Goodwill (Details)
Goodwill (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 2,727 |
Goodwill associated with the F&G acquisition | 1,725 |
Goodwill, ending balance | 4,452 |
Title | Operating Segments | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 2,462 |
Goodwill associated with the F&G acquisition | 0 |
Goodwill, ending balance | 2,462 |
F&G | Operating Segments | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Goodwill associated with the F&G acquisition | 1,725 |
Goodwill, ending balance | 1,725 |
Corporate and Other | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 265 |
Goodwill associated with the F&G acquisition | 0 |
Goodwill, ending balance | $ 265 |
F&G Reinsurance - Effect of Rei
F&G Reinsurance - Effect of Reinsurance on Premiums Earned, Benefits Incurred and Reserve Changes (Detail) - Traditional Life Insurance Premiums $ in Millions | 1 Months Ended |
Jun. 30, 2020USD ($) | |
Premiums and other considerations: | |
Direct | $ 17 |
Assumed | 0 |
Ceded | (12) |
Net | 5 |
Benefits and Other Changes in Insurance Policy Reserves: | |
Direct | 155 |
Assumed | 0 |
Ceded | 0 |
Net | $ 155 |
F&G Reinsurance - Narrative (De
F&G Reinsurance - Narrative (Details) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 01, 2020USD ($) |
Ceded Credit Risk [Line Items] | ||||
Expected credit losses on reinsurance recoverable | $ 22,000,000 | $ 0 | ||
Number of policies reinsured by foreign company not engaged in insurance | 0 | |||
Reinsurance risk charge fee | $ 1,700,000 | |||
Wilton Reassurance Company | ||||
Ceded Credit Risk [Line Items] | ||||
Net amount recoverable | 1,478,000,000 | |||
Kubera Reassurance Company | ||||
Ceded Credit Risk [Line Items] | ||||
Net amount recoverable | $ 828,000,000 | |||
Life and Annuity Insurance Product Line | ||||
Ceded Credit Risk [Line Items] | ||||
Reinsurance retention policy, amount retained | $ 185,000,000 | $ 758,000,000 | ||
Fixed indexed annuities | ||||
Ceded Credit Risk [Line Items] | ||||
Reinsurance retention policy, amount retained | $ 1,000,000,000 | $ 4,000,000,000 |
F&G Insurance Subsidiary Fina_2
F&G Insurance Subsidiary Financial Information and Regulatory Matters - Narrative (Details) $ in Millions | Jun. 30, 2020USD ($) |
Statutory Accounting Practices [Line Items] | |
Increase (decrease) in statutory capital surplus | $ (57) |
Change in statutory capital surplus | 100 |
Non-permitted statutory accounting practices | (11) |
Statutory capital and surplus | 93 |
IOWA | |
Statutory Accounting Practices [Line Items] | |
Change in statutory capital surplus | $ 4 |